GOP senators block bid of consumer agency nominee
By blocking President Obama’s nominee to head the Consumer Financial Protection Bureau, Senate Republicans showed their near unanimous commitment to keep the controversial agency hobbled until after next year’s elections.
Obama and Democrats vowed that they would continue to fight to confirm Richard Cordray. And they portrayed Republicans as doing Wall Street’s bidding to prevent a tough cop from patrolling the financial marketplace, a message that is likely to be a Democratic theme in the presidential campaign and key Senate races.
“We are not giving up on this,” Obama told reporters after Thursday’s vote. “We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers being protected from unscrupulous financial operators.”
Republicans said they would not give in on their demands for key changes in the agency to provide more accountability to Congress and other regulators — changes that Democrats strongly oppose.
Republicans demonstrated their near total solidarity Thursday as Cordray’s nomination fell seven votes short of the 60 needed to cut off debate and proceed to an up-or-down vote. The final tally was 53-45, with only one Republican, Scott Brown of Massachusetts, voting to end the filibuster.
Until changes are made to the agency, “we cannot, should not and will not move forward on the nomination of a director to lead this massive and unaccountable bureaucracy,” said Sen. Richard Shelby (R-Ala.).
Frustrated Democrats said they were eager to take their case to the voters.
“Republicans have established a pattern of opposing ideas that would benefit the middle class, be it extending the payroll tax [cut] or putting in place a strong agency to protect middle-class consumers from unscrupulous companies,” said Sen. Charles Schumer (D-N.Y.). “Well, this is a debate we Democrats are eager to have.”
Democrats expected Thursday’s vote to fall short, despite a strong push by the White House this week to gain more support.
But party leaders pressed ahead anyway to try to show that they are fighting for consumers while Republicans are backing Wall Street, which has opposed the new agency, said Edward Mills, a financial policy analyst at FBR Capital Markets & Co.
“It helps the narrative ... Democrats on the side of the middle class, Republicans are on the side of big banks,” Mills said.
In the meantime, the consumer bureau — the centerpiece of last year’s overhaul of financial regulations — will continue to operate with an acting director. Under the law, the agency can’t exercise some of its authority, particularly overseeing non-bank financial institutions such as mortgage brokers and payday lenders, without a Senate-confirmed director.
Democrats and consumer advocates have warned that that leaves Americans vulnerable to the same sort of abuses, such as predatory lending, that helped trigger the financial crisis.
So far, the agency has been moving deliberately in the areas where it has authority, such as proposing new, simplified disclosure forms for bank-issued mortgages and credit cards.
The slow pace reflects the complications of ramping up a new agency as well as concerns about doing anything bold before a director is confirmed, said David Anthony, co-leader of the financial services litigation practice group at the Troutman Sanders law firm.
“The bureau is taking a softer approach because it doesn’t want to come out while there’s all the hullabaloo about the nomination and create controversy,” he said.
Cordray is a former Ohio attorney general who serves as the agency’s head of enforcement. He was nominated in July by Obama after consumer advocate Elizabeth Warren, who first proposed such an agency in 2007, withdrew from consideration.
Republicans were strongly opposed to Warren, who had been working as an administration advisor for nearly a year to help launch the agency. But nearly all Republicans were already on record as opposing any nominee.
All but two of the Senate’s 47 Republicans vowed in a May letter that they would not allow a confirmation vote unless changes were made to the bureau’s structure. Republicans want to replace the single director with a bipartisan commission, subject the agency’s budget to the congressional appropriation process and make it easier for other banking regulators to veto new consumer protection rules.
Sen. David Vitter (R-La.) said the changes were designed to limit the agency’s “unbridled, unprecedented authority.”
“This notion that we’re against consumer protection, that we’re trying to gut the CFPB is just silly,” Vitter said.
The Obama administration launched an extraordinary push this week to try to get Cordray confirmed. Obama and senior White House officials gave interviews to TV stations in Alaska, Indiana, Iowa, Maine, Nevada, Tennessee and Utah to try to pressure Republican senators there to vote to cut off debate on Cordray’s nomination.
The effort did little to help Cordray. Brown was not among those targeted because he did not sign the May letter. The other senator who did not sign, Lisa Murkowski (R-Alaska), voted to block Cordray’s nomination.
Sen. Olympia Snowe (R-Maine), who was one of only three Republicans to vote for the financial reform law, voted present Wednesday. She said she did not feel it was appropriate to vote on the nomination because her husband is involved in the student loan industry, which the agency oversees.
Obama said he would look at all options to install Cordray, including a recess appointment that would allow him to serve for a year without Senate approval. But Republicans have been preventing such appointments by blocking Congress from going on a formal recess, and they are expected to continue the practice next year.
Staff writer Christi Parsons contributed to this report.
