Senate Republicans hearing testimony from President Barack Obama’s nominee to head the Consumer Financial Protection Bureau said they wouldn’t confirm anyone to run the agency without changes to its structure.
Republicans have a “substantive disagreement” about how the bureau functions under the Dodd-Frank financial regulatory overhaul, said Senator Richard Shelby, the top Republican on the Senate Banking Committee, reiterating his opposition to the nomination of Richard Cordray.
“That’s going to have to be resolved before we move this nomination further,” Shelby said during Corday’s confirmation hearing today.
Forty-four Republican senators have vowed to block a nominee unless the bureau is restructured to remedy what they call a lack of accountability. The changes they are demanding include the replacement of the director with a five-member commission.
In the 100-member Senate, nominees generally need 60 votes for confirmation.
Senator Tim Johnson, the South Dakota Democrat who chairs the banking panel, accused Republicans of doing the bidding of banks who lobbied against the agency’s creation.
“The misleading claim of no CFPB accountability -- drummed up by special interests and put forth by a vocal minority -- should be exposed for what it is: an attempt to destroy the Bureau’s ability to do its job of protecting American consumers,” Johnson said.
Shelby didn’t address Cordray’s qualifications for the job of bureau director, and didn’t say he would support Cordray if the Obama administration agreed to structural changes. He asked no questions of Cordray.
Asked by Senator Robert Menendez, a New Jersey Democrat, whether Republicans had questioned his qualifications for the job in private meetings before the hearing, Cordray responded, “They did not.”
Obama announced on July 18 that he would nominate Cordray, who is currently the bureau’s assistant director for enforcement, to head the new agency. In doing so, Obama passed over Elizabeth Warren, the Harvard professor who spent much of the past year setting up the bureau.
Bartlett Naylor, financial policy advocate for Public Citizen, a consumer group, warned that the 44 Republicans blocking a director confirmation were also blocking an agency that could help stop future financial crises. Public Citizen and other consumer groups support Cordray.
“The agency’s opponents also defy American public opinion, where polls show wide support for a strong CFPB,” Naylor said in an e-mailed statement.
A July poll by the Consumer Reports National Research Center, part of the nonprofit group that publishes Consumer Reports magazine, found that 74 percent of those surveyed “strongly support” or “somewhat support” the new consumer agency.
The poll, conducted from July 14-17, surveyed 1,012 adults. It had a sampling error of plus or minus 3.1 percentage points.
As Ohio’s attorney general, Cordray rose to national prominence by suing major financial firms including Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc. over flawed mortgage servicing. He lost his bid for re-election in November 2010, and Warren hired him for the top enforcement slot.
Asked by Senator Robert Corker, a Tennessee Republican, about his background in Ohio state politics, Cordray, who once said he would run for governor, said an independent federal regulator “must be completely absolved of politics.” He added, “I have no plans to run for any political office.”
In his opening statement, Cordray played down the role of lawsuits in consumer protection. The consumer bureau has a “bigger and more flexible toolbox” than he had in Ohio, including research, regulations, consumer education and supervision of financial firms, Cordray said.
“I know from my own experience that lawsuits can be a very slow, wasteful, and needlessly acrimonious way to resolve a problem,” Cordray said.
Yet he did promise lawsuits would be part of the consumer bureau’s work.
“If people are ignoring or evading consumer protections laws -- and seeking to gain an unfair advantage over their law- abiding competitors -- then litigation is an essential tool, and we will use it judiciously,” Cordray said in the testimony.
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