News / USA

Obama Presses Senate to Approve Financial Protection Chief

Richard Cordray, nominated to head a new consumer financial protection bureau (file photo)
Richard Cordray, nominated to head a new consumer financial protection bureau (file photo)

President Barack Obama is stepping up pressure on the U.S. Senate to approve his nominee to head a new consumer financial protection bureau.  Congressional Republicans vow to block the nomination unless Mr. Obama and his fellow Democrats agree to changes in how the new bureau is organized and funded.

Nominated in July, Richard Cordray is a former Ohio attorney general with a record as a tough consumer advocate and aggressive prosecutor of financial fraud.

President Obama selected him to head the Consumer Financial Protection Bureau, or CFPB, when a previous nominee ran into fierce political opposition from Republicans.

But Cordray's nomination has run into the same hurdle.  Forty-five Republicans say they will vote against him unless changes are made to reduce what they call "excessive powers" vested in the new bureau.

Senate Minority Leader, Republican Mitch McConnell asserted this week that President Obama had done nothing to address "legitimate" Republican concerns and called for a "drastic overhaul" of the bureau.

"The CFPB in its current form cannot stand," said McConnel. "In its current form, the CFPB could easily be used for political purposes at the expense of access to credit, job creation, economic growth and financial stability."

A day before an expected Senate vote on Cordray's nomination, White House Press Secretary Jay Carney on Wednesday called on Republicans to end what he called "obstructionist behavior."

Deputy Treasury Secretary Neal Wolin said that without a director, the consumer bureau cannot adequately supervise and enforce rules for institutions in the non-banking financial services, where "some of the most harmful, deceptive and unfair and predatory lending practices" have occurred.

"Their [the Republican] position continues to leave the door wide open for the same abuses that occurred prior to, and were an importance cause of, the [2008] financial crisis that we are still feeling the effects of," said Wolin.

Republicans want the consumer bureau to be run by a board rather than a single director.  They also want the new bureau's budget, which is estimated at about $500 million, to have closer congressional scrutiny.

Wolin said the bureau already operates with a strict funding cap and under an "unprecedented" number of accountability and oversight provisions.   

President Obama says he will resist efforts in Congress to undermine a major financial system reform law he signed last year, of which consumer protection is a part.  He spoke about Cordray's nomination and Republican opposition in a major speech in Kansas this week.

"Consumers deserve to have someone whose job it is to look out for them," said President Obama. "And I intend to make sure they do."

The U.S. Conference of Mayors has urged an end to what it calls "gridlock" in the Senate blocking Cordray's confirmation, echoing the administration position that the bureau cannot rein in financial practices that contributed to the U.S. economic downturn.

The White House also pointed to support for Cordray by 37 state attorneys general.

Utah Attorney General Mark Shurtleff, a Republican, drew a distinction between what he called the "policy battle" being waged by Republican lawmakers and the need to move forward with effective consumer financial protections.

"This is a rule of law issue and we need to go forward," said Shurtleff. "It's the law.  If my party wants to change the law, if they get into power and are able to do that, fine.  But in the meantime, we have a job to do."

Asked whether President Obama would use his authority to make what is called a "recess appointment" to put Cordray in place at the consumer bureau after the Senate adjourns, White House Press Secretary Jay Carney said he did not want to get ahead of Thursday's Senate vote.

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