Senate committee approves Richard Cordray to head consumer agency
The Senate Banking Committee approved the nomination of former Ohio Atty. Gen. Richard Cordray to be the first director of the new Consumer Financial Protection Bureau, but his confirmation faces a solid Republican roadblock.
That was evident in Thursday's vote. All 10 Republicans on the committee voted against Cordray's nomination, which passed with the support of the panel's 12 Democrats.
Nearly all Senate Republicans -- enough to mount a successful filibuster -- have vowed to block the confirmation of any nominee to head the agency unless its powers are watered down.
Testifying before the committee after its vote, Treasury Secretary Timothy F. Geithner urged Republicans to reconsider Cordray's nomination.
"I think you’re going to find he’s an exceptionally talented, thoughtful leader [with] an excellent record," Geithner said.
"I know some of you have said there’s no person you’d confirm for this job, ever, without some fundamental changes to the structure of the bureau," he continued. And I would just remind you that if the Senate fails to confirm a director for the CFPB, then...we will leave a vast array of nonbank financial institutions, consumer finance companies, outside the scope of consumer protection, which was exactly the same mistake that left us so vulnerable to the financial crisis we went through."
Under the financial reform law that created the new agency, it cannot exercise some of its powers without a Senate-confirmed director. For example, the agency won't get new authority over other largely unregulated sectors of the financial services industry, including mortgage brokers, payday lenders and private issuers of student loans.
But Republicans, nearly all of whom voted against the Dodd-Frank financial reform law, want major changes in the agency's structure. Among them are replacing the director position with a bipartisan commission, subjecting the bureau's funding to annual congressional review and allowing other financial regulators to block the agency's actions more easily.
“My colleagues and I stand by our pledge that no nominee to head the CFPB will be confirmed by the U.S. Senate -– regardless of party affiliation -– without basic changes to the bureau’s structure," Sen. Jerry Moran (R-Kan.) said in a written statement before the vote.
The U.S. Chamber of Commerce, one of the most outspoken opponents of the new agency, said it was disappointed that the committee approved Cordray's nomination "without taking seriously the calls for reforms."
“It is neither good public policy nor common sense to suggest no changes to a structure that allows a single, irremovable individual to dictate terms or even ban consumer financial products, have access to more than half a billion dollars in funding per year outside the budget process, and make decisions that could undermine safety and soundness of financial institutions," said David Hirschmann, president of the group's Center for Capital Markets Competitiveness.
But liberal and consumer groups continue to press for Cordray to be confirmed so the agency can start exercising all of its powers.
"Without Cordray as the sheriff on the beat on Wall Street, Republicans are just giving big banks a green light for more reckless behavior with our money," said Tom McMahon, executive director of Americans United for Change.
-- Jim Puzzanghera
Photo: Richard Cordray, the nominee to head the Consumer Financial Protection Bureau. Credit: Getty Images.