President Obama circumvented Senate Republicans and made arecess appointment of Richard Cordray to run the Consumer FinancialProtection Bureau. In making the appointment he explained that we“shouldn’t be weakening oversight and accountability, we should bestrengthening it–especially when it comes to looking out forfamilies."

Obama, who made the announcement during a Jan. 4 speech on theeconomy in Ohio, said Cordray will “be in charge of one thing:looking out for the best interests of American consumers. His jobwill be to protect families like yours from the abuses of thefinancial industry. His job will be to make sure you’ve got all theinformation you need to make important financial decisions.”

The appointment, which runs until the end of next year, ended afight that Obama had with Senate Republicans who had used thechamber’s rules to block Cordray’s confirmation even though amajority of senators supported it.

Cordray was nominated to run the CFPB last July and hisnomination was approved along party lines by the Senate BankingCommittee. However, when it was brought up to a vote by the fullSenate last month, Senate Republicans blocked Cordray’s confirmation, even thougha majority of Senators supported it.

The CFPB is an independent agency housed inside the FederalReserve that was established by the Dodd-Frank financial overhaulbill that Congress passed in 2010. It has direct supervisoryauthority over financial institutions with assets of more than $10billion though all financial institutions must comply with itsregulations. Only Navy Federal FCU, State Employees of NorthCarolina CU and Pentagon FCU fall into that category.

Cordray, a former Ohio attorney general, has headed the CFPB’senforcement efforts since last January.

CUNA President/CEO Bill Cheney issued a statement saying thathis group has “has met with Mr. Cordray at the Consumer FinancialProtection Bureau and the Ohio League has developed a strong,professional relationship with him. The fact that the agency nowhas a director holds ramifications for credit unions, otherfinancial institutions and financial service providers that havebeen unregulated at the federal level before now.”

NAFCU President/CEO Fred Becker said in an interview that hisgroup “looks forward to working with Mr. Cordray. Those creditunions that have worked with him have found him reasonable andsomeone who understands the credit union industry.”

By having a permanent director in place, the CFPB will be ableto regulate mortgage companies, payday lenders, debt collectors andother financial companies. It will also be able to write newregulations that identify “unfair, deceptive or abusive acts orpractices” by any party offering a consumer financial product orservice. Previously, the agency could only revise existingregulations.

The bureau also now has the ability to adopt model disclosures for any financialproduct or service. It also has the power to determine whichentities are larger participants in markets for other consumerfinancial products and, thus, subject to the supervision andexamination.

Credit unions have expressed concern about the increasedregulatory burden they may face because of new rules from the CFPB.

“With the bureau, those who didn’t cause the crisis are facingmore regulation. But those entities that did cause it don’t havemore of a compliance burden,” said NAFCU’s Becker.

But the additional powers that the CFPB has now that it has apermanent director could help credit unions.

Wright-Patt Credit Union President/CEO Douglas Fecher tolda Senate panel last year that his credit union was at adisadvantage because until the CFPB has a permanent director, it isforbidden by law to regulate payday lenders and pawn shops. Whilecredit unions are the most heavily regulated financial institutionhis competitors aren’t and this creates an uneven playing field,said Fecher, whose $2.1 billion credit union is based in Fairborn,Ohio.

The Senate Republicans said they opposed the confirmation amongany director of the CFPB until Senate Democrats and President Obamaagreed to structural changes to the bureau, including replacing thesingle director with a five-member board.

Last July, along mostly party line vote of 241-173, theGOP-controlled House approved a measure to have the bureau run by afive-member board rather than a director; allow the bureau’sdecisions to be overturned by a majority vote of the FinancialStability Oversight Council rather than two-thirds as currentlyrequired; and delay some of the CFPB’s operations until it has aconfirmed director in place.

The Democratic-controlled Senate hasn’t taken up themeasure.