A year after the bill creating the Consumer Financial Protection Bureau was signed, Republicans are trying to restructure it and the newly nominated director Richard Cordray is caught in the middle of a fight between the political parties.
Cordray, a former Ohio attorney general who was known for his work on consumer issues, was nominated by President Obama on July 18, but if there isn’t an agreement between the White House and Senate Republicans, he might not have the opportunity to serve. The CFPB, an independent agency housed in the Federal Reserve, began operating on July 21.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) praised Cordray’s credentials and promised to hold a confirmation hearing soon. But Johnson’s support, and the fact that Democrats have a solid majority in that chamber, may not be enough
After President Obama named Cordray, Senate Republicans reiterated their intention to block the confirmation of any nominee until the structure of the CFPB is changed, including have it run by a five-member board rather than by a director.
“Those who are advocating for more accountability have been accused of trying to ‘gut’, ‘cripple’, or ‘defang’ the bureau,” said Sen. Richard Shelby (R-Ala.), the top Republican on the Senate Banking Committee. “I believe that it is important to note, however, that we have not, and are not, proposing any changes to the bureau’s authority. We are proposing changes to the bureau’s structure so that it will be more accountable to the American people.”
Although the GOP lacks a majority in the Senate the rules of that chamber give the minority party considerable power to thwart the will of the majority. And the GOP could filibuster Cordray’s nomination and that would require 60 votes, rather than a majority of 51. The Senate has 57 Democrats, 41 Republicans and two independents who vote with Democrats.
At press time, the Republican-controlled House was poised to pass legislation that would have the bureau run by a five-member board rather than a director; allow the bureau’s decisions to be overturned by a majority vote of the Financial Stability Oversight Council rather than two-thirds currently required.
CUNA and NAFCU both support allowing the bureau’s decisions to be overturned by a majority of the Financial Stability Oversight Council, which is made up of the heads of all the financial regulatory agencies, including the NCUA.
But CUNA didn’t take a position on whether the agency should be run by one person or by a five-member board. If Corday is confirmed, credit unions will have an ally at the helm of the CFPB, predicts Ohio Credit Union League President Paul Mercer.
“He is a very bright, very impressive public servant who is likely to go after the bad actors,” Mercer said. “It is clear that he is respectful of the fact that the credit union model is one that is built from the bottom up to deal with needs of consumers.”