Four years ago, Elizabeth Warren was a Harvard Law professor crusading for the creation of a consumer protection agency to police the abusive practices that harmed millions of Americans during the financial crisis.
Now that Warren has taken office as a Democratic senator from Massachusetts, she is fighting from inside the system to keep the upstart Consumer Financial Protection Bureau’s power intact as her Republican colleagues vow to block the confirmation of CFPB director Richard Cordray.
Senate Republicans are urging President Obama to alter the structure of the bureau by subjecting it to annual appropriations and installing a five-member board for greater transparency and accountability. The White House, however, insists that the bureau remain an independent regulator.
Consumer groups say the GOP’s structural argument is an attempt to destroy the agency, after a failed campaign against its creation.
Working alongside Sens. Sherrod Brown (D-Ohio) and Jack Reed (D-R.I.), Warren held news conferences Wednesday and Thursday calling on Republicans to bring Cordray’s confirmation to a vote. In response to GOP claims that the bureau operates without controls, the senators noted that CFPB can be overruled by the Financial Stability Oversight Council and has a statutory cap on its funding.
“It is past time for an up-or-down vote,” Warren said Thursday. “The financial industry needs certainty, and families need to know there is a strong and independent watchdog on their side in Washington.”
The Senate majority leader, Harry M. Reid (D-Nev.), and banking committee chairman, Tim Johnson (D-S.D.), joined the fight Thursday by sending the president a letter, signed by 52 Democrats and two Independents, in support of the agency.
“Attempts to force re-litigation of issues related to CFPB’s funding and organization by filibustering Director Cordray’s renomination are irresponsible and inconsistent with our democratic values,” Reid and Johnson said in the letter.
Cordray’s nomination met similar opposition in 2011, which led Obama to install him through a recess appointment. The director’s term expires at the end of the year unless he wins approval.
Warren and her Democratic colleagues face an uphill battle. Senate staffers say Obama’s end-run has poisoned the waters for Cordray’s confirmation. Earlier this month, a group of 43 Republican senators sent a letter to the president promising to hold the confirmation hostage unless their demands are met.
“Far too much power is vested in the sole CFPB director without any meaningful checks and balances,” said Sen. Mike Crapo (Idaho), ranking Republican on the Senate banking committee, and Minority Leader Mitch McConnell (R-Ky.), in the letter. “We will continue to oppose the consideration of any nominee . . . until key structural changes are made.”
Efforts to dismantle the CFPB gained momentum last month, when a federal appeals court said the president exceeded his constitutional authority by making appointments when the Senate was on break. While the ruling was aimed at the three members of the National Labor Relations Board, it could help a separate lawsuit seeking in part to use the same constitutional argument to remove Cordray.
Despite the assault on the structure of the CFPB, the agency has been lauded by both consumer groups and the financial services industry for its work. The bureau has written several critical rules to reform mortgage lending and leveled enforcement actions against banks involved in deceptive marketing.
“This agency has proven what it can do,” Warren said. “The notion that a minority can hold up the laws of the United States by using a filibuster on an appointment is fundamentally wrong.’’