President Obama’s new chief of staff, former banker William M. Daley, has removed himself from the search for a nominee to lead the Consumer Financial Protection Bureau, a signature piece of the administration’s overhaul of the financial regulatory landscape.
Before coming to the White House in January, Daley oversaw, among other things, J.P. Morgan Chase’s lobbying operation as the bank opposed the creation of the new watchdog. Daley was among several top executives who decided the bank would support new consumer protections but not a new regulator to enforce them.
White House spokeswoman Amy Brundage said in a statement that, as chief of staff, Daley “may be involved in matters involving the CFPB and is not recused from those matters. However, Mr. Daley has chosen not to participate in the process of selecting a nominee for CFPB director.” She added that presidential counselor Pete Rouse is leading the process.
While Daley has stepped back from the issue — as well as any matter involving his former employer — the White House has had steady pressure to nominate someone to the high-profile post.
The consumer bureau, intended to protect borrowers from abuses by lenders, was one of the most controversial elements in the debate over financial regulation on Capitol Hill last year.
Concerned that Harvard law professor Elizabeth Warren — a longtime consumer advocate who conceived the regulator position in 2007 — would face a contentious confirmation battle, President Obama appointed her in September to a temporary post overseeing its formation.
More than six months later, the bureau has hired more than 100 employees and secured office space near the White House. But the president has yet to nominate a permanent director, and everyone from Capitol Hill Republicans to consumer advocates have been barking at the White House to get on with it already.
“This is a need that unites everybody affected by the new bureau — the regulated community and the consumers,” said Travis Plunkett, legislative director for the Consumer Federation of America, whose organization has been pushing for a nomination for months.
Groups such as Plunkett’s have long clamored for a nominee — most think that Warren remains the best candidate — and have argued that further delays threaten to weaken the fledgling bureau, which legally cannot flex all its new legislative muscle until a confirmed director is in place.
“If the bureau opens its doors in July without a director, it won’t be able to use all its authority to protect consumers,” Plunkett said. “And that will be a major problem for consumers.”
Some banking officials, who largely opposed the creation of the consumer bureau on grounds that it would create burdensome and unnecessary regulations, also have been urging Obama to speed up a nomination.
“We would like to know what is going to happen to us,” said former Oklahoma governor Frank Keating (R), American Bankers Association president. He said it is “obviously worrisome for us to be potentially subjected to regulation, potential oversight” by a de facto director who hasn’t been confirmed by the Senate.
Republicans on Capitol Hill, who almost universally fought the creation of the new bureau, have been calling out Obama for his failure to nominate someone to the post, which comes with a five-year tenure. They don’t like the idea of Warren remaining in her current role indefinitely without the blessing of Congress.
“Sen. Shelby believes that President Obama should fulfill his responsibility to nominate qualified individuals wherever the laws calls for him to do so,” said a spokesman for Sen. Richard Shelby (Ala.), the ranking Republican on the Senate banking committee and a frequent Warren critic, who would hold much sway over the confirmation process.
Warren seems to recognize the pressure to put someone in the director’s chair.
“Congressman, I’ve tried to make it clear that it is important that we have a nomination,” she told House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.) in a hearing last week. “I am aware of the need for urgency.”
While the White House has considered many potential candidates, no decision appears imminent. Warren has deflected inquiries about whether she hopes to get the nod, but she has not said she wouldn’t accept the role.
Since Warren’s interim appointment last fall, Republican power in the Senate has grown, making it all the more difficult for the White House to get any nominees confirmed.
Brundage said Obama would try to nominate someone as soon as possible and praised Warren’s work setting up the agency. “Over the past six months, Elizabeth Warren and her team have been extraordinarily effective,” she said.