On a party-line vote, the Senate Banking Committee voted to confirm former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau.
All 12 committee Democrats supported Cordray, while all 10 of the panel’s Republicans voted against him. There was no discussion of the nomination at the Oct. 6 session.
However, before the vote, Sen. Sherrod Brown (D-Ohio) criticized Republicans for their unanimous opposition to Cordray because they disagree with the idea of the bureau. He also cited the words of support that Wright-Patt CU President/CEO Doug Fecher gave to Cordray when Fecher testified before Brown’s subcommittee on Oct. 4.
Fecher, whose Dayton, Ohio-based credit union has assets of $2.1 billion, told the panel that Cordray has “outstanding qualifications and understands the unique role of credit unions and their role in the lives of consumers.”
Cordray, who was defeated for re-election as Ohio’s attorney general last November, has headed the bureau’s enforcement efforts since January.
It’s not clear whether Cordray will receive a vote by the full Senate.
All Senate Republicans have vowed to oppose any nominee to run the CFPB until the Obama administration and Senate Democrats agree to change the structure of the bureau. The House passed legislation to accomplish that but Senate Democrats and the Obama administration oppose the measure, and the Senate has taken no action.
Although the Democrats control the Senate, the rules of that chamber allow the minority party to force any nominee to receive 60 votes, which would require some Republicans to support Cordray.
Treasury Secretary Timothy Geithner, who was testifying before the committee on another matter, added to his prepared remarks and urged Republicans to support Cordray. He called the nominee “talented and thoughtful” and noted that without a director, the CFPB wouldn’t be empowered to regulate nonbank entities such as payday lenders.
In response to a question from Sen. Richard Shelby, the panel’s top Republican, Geithner said that the changes being supported by Republicans represent a “significant weakening of the bureau.” Geithner said he was optimistic that Republicans will reconsider their position.
Shelby (R-Ala.) said that without a change in the administration’s position, Senate Republicans won’t alter their stance and urged Geithner not to get too optimistic about the possibility of a change.
Neither CUNA nor NAFCU took a position on Cordray’s nomination.
Ohio Credit Union League President Paul Mercer stopped short of endorsing Cordray but wrote when Cordray was nominated that “I am confident that, given the opportunity, you will diligently represent the mission and Consumer Financial Protection Bureau’s mission and purpose as its director." Ohio Credit Union League General Counsel John Kozlowski was at Cordray’s confirmation hearing last month, and Corday introduced him to the senators before his testimony.
At that hearing, Cordray said that credit unions and community banks would be able to better compete when the CFPB regulates nonbank institutions because this would level the playing field. He noted that many nonbanks helped cause the financial crisis because they made loans that were destined to fail.
The CFPB, which was created by the Dodd-Frank financial overhaul bill that Congress passed last year, is an independent agency housed inside the Federal Reserve. While the regulations it issues will apply to all financial institutions, the bureau will only have direct supervisory authority over institutions with assets of $10 billion or more. That includes three credit unions: Navy FCU, Pentagon FCU, and State Employees of North Carolina CU.
For all other credit unions, the enforcement of the CFPB’s regulations will be done by the NCUA or their state regulator.