Richard Cordray vows accountability if confirmed to head agency

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Former Ohio Attorney General Richard Cordray promised senators that he would be accountable to Congress if confirmed to be the first director of the new Consumer Financial Protection Bureau, hoping to address one of the criticisms of Republicans vowing to block any nominee until the agency’s powers are scaled back.

Cordray, who was nominated by President Obama in July, also tried to ease Republican and industry concerns that the bureau would be too aggressive in taking on banks and other financial institutions, saying he would use government lawsuits ‘judiciously.’

‘I know from my own experience that lawsuits can be a very slow, wasteful and needlessly acrimonious way to resolve a problem,’ Cordray told the Senate Banking Committee on Tuesday in written testimony at his confirmation hearing.

Sen. Tim Johnson (D-S.D.), the committee’s chairman, and other Democrats criticized Republicans for ‘rehashing the same debate Congress had last year’ over creation of the agency as part of the sweeping overhaul of financial regulations.

“The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for that job. Instead, a vocal minority is playing games with the process and holding Mr. Cordray’s nomination hostage,’ Johnson said. ‘This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit unions at a competitive disadvantage to non-bank financial companies.’

In May, 44 Senate Republicans — enough to mount a successful filibuster — vowed to block the confirmation of any nominee to head the agency unless major changes were made in its structure and that the White House argues would weaken its powers. Among the changes they want is to replace the single director with a five-member bipartisan commission and make it easier for other banking regulators to overturn the director’s decisions.

‘Because of the expansive jurisdiction of the bureau, every American will be affected by the director’s decisions,’ said Sen. Richard Shelby (R-Ala.), a leading opponent of the agency. ‘The director will single-handedly determine the financial products consumers can buy, as well as which consumers have access to credit, and which do not....It is staggering the amount of control the director will exert over the daily financial choices available to Americans.’

The delay threatened by Republicans is significant because the bureau, which began operations under an acting director in July, can’t exercise some of its broad authority without a Senate-confirmed director. Among the powers on hold are regulation of mortgage brokers, payday lenders and other largely unregulated parts of the financial system.

Cordray, 52, was one of the most aggressive state officials in taking on banks and mortgage companies after the financial crisis, and touted that experience Tuesday. He was hired last year to be the head of enforcement for the consumer bureau after narrowly losing re-election in Ohio.

‘We pursued many actions against foreclosure rescue scammers who were reaching into the pockets of desperate people in an effort to steal what little remained as they sought to keep their homes,’ Cordray said. ‘And where necessary, we pursued those mortgage servicers who, despite strong warnings, repeatedly violated consumer protection laws.’

And although he said he would be careful in using lawsuits, he promised to take action when necessary.

‘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,’ he said.

Consumer and public interest groups on Tuesday called on senators to confirm Cordray’s nomination.

‘It’s time for Congress to set aside politics and confirm Richard Cordray so the CFPB can fully protect consumers,’ said Pamela Banks, senior policy counsel for Consumers Union. ‘Holding up this nomination may be good for the big banks and shady lenders, but not for the families whose finances are drained by high-cost loans and other unfair financial practices.’

The U.S. Chamber of Commerce, however, said there were still many unanswered questions about the bureau’s ‘unique and ill-advised structure’ and urged senators to ‘press for stronger checks and balances’ for its operation.

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-- Jim Puzzanghera