Why GOP vows to block Obama nominee for consumer-watchdog agency
The sweeping financial reform legislation passed by Congress a year ago created the Consumer Financial Protection Bureau. President Obama nominated its first director Sunday, but Republicans are against the structure of the entire agency.
President Obama on Sunday at last named his choice to lead the new consumer-watchdog agency created by Congress in sweeping financial reforms a year ago.Skip to next paragraph
Subscribe Today to the Monitor
It's nothing against the man himself, former Ohio attorney general and five-time "Jeopardy!" champ Richard Cordray. Rather, it's Republicans' concerns about the entire agency, called the Consumer Financial Protection Bureau (CFPB). They say its organization runs counter to the constitutional principles of checks and balances and argue it is “one of the least accountable and most powerful agencies in Washington.”
Until Mr. Obama addresses their concerns, Republicans have vowed to block the appointment of a director. The bureau is scheduled officially to open Thursday.
“There is a lot of bad blood between congressional Republicans and the bureau over enforcing the [financial reform] Dodd-Frank Act even before they officially open their doors,” says consultant Pete Davis of Davis Capital Investment Ideas and a former congressional staffer.
The goal of the bureau is to act on behalf of consumers, enforcing consumer-oriented laws that affect banks, mortgage companies, and other lenders, as well as investigating consumer complaints against the financial industry.
But in May, 44 Republican senators signed a letter saying they would block any appointment to head the bureau unless Congress and the president make far-reaching changes to its structure and funding. The Republicans have three main objections:
- A single person is responsible for CFPB's operations. Republicans want a board to oversee the bureau.
- The CFPB gets its funding from the Federal Reserve and does not need approval from any congressional committee. Republicans want Congress to have direct oversight over the bureau's finances.
- The bureau has broad rulemaking ability. Republicans are concerned that rules established by the new agency would cause banks to fail.
“The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution,” wrote Sen. Richard Shelby (R) of Alabama, the top Republican on the Committee on Banking, House and Urban Affairs.
However, consumer groups say the changes demanded by the Republican senators would result in a weak and timid agency.
“Several key senators want to reopen negotiations on a law that passed Congress last year, and the president won’t allow it,” says Travis Plunkett, legislative director of the Consumer Federation of America, a lobbying and watchdog group in Washington.
After Congress voted on the Dodd-Frank bill, many people thought Obama would appoint Harvard professor Elizabeth Warren to run the bureau. She was instrumental in creating the bureau and has hired many of its managers.