Members of the Senate banking committee approved Cordray’s nomination in October in a party-line vote, but 45 of the chamber’s 47 Republicans have penned a letter to Obama pledging to oppose any nominee unless the bureau’s powers are curtailed, a move that all but ensures Cordray will fall short of the 60 votes necessary for confirmation later this week.
In a report released Sunday night, the National Economic Council said the watchdog agency is “hamstrung” because it can’t exercise its full authority in supervising non-bank financial institutions such as payday lenders, credit-reporting agencies and debt collectors.
Brian Deese, deputy director of the NEC, told reporters on a conference call Sunday that without a director, the bureau “cannot provide the kind of oversight and transparency that consumers need,” and that the Senate’s failure to approve a nominee could impact the tens of millions of Americans who regularly rely on such non-bank institutions.
Senate Republicans shot back that the Obama administration has shown little interest in addressing their concerns about the agency’s accountability.
“Current financial regulators already evade accountability by claiming independence or recusing themselves when they fail,” Sen. Richard C. Shelby (Ala.), the ranking Republican on the banking committee, said in a statement. “The [CFPB] is unaccountable by design. We will continue to fight for accountability from regulators.”
Sen. Rob Portman (R), who like Cordray is from Ohio, said in a statement Sunday that “there are serious problems in the current structure” of the watchdog agency.
“I have always believed the way to avoid regulatory excess is through accountability, but the CFPB was designed to be entirely unaccountable to the American people,” said Portman, who was among the 44 Senate Republicans urging Obama to make changes. “Unfortunately, instead of working with me and other Republicans to reform this new bureaucracy, the White House has stonewalled requests for cooperation, wanting a political showdown more than a way forward.”
Among the changes Republicans are pushing for are stricter oversight measures and the replacement of the director by a five-member board. Republicans also want funding of the agency to be made by Congress rather than through the Federal Reserve.
At a conference of consumer advocates last week, Raj Date, who succeeded Elizabeth Warren as special adviser to the treasury secretary in charge of setting up the bureau, argued that the watchdog agency should receive its funding outside of the congressional appropriations process, just as other banking regulators do.
“Independent funding of the CFPB and other bank supervisors ensures that we are not at the mercy of outside influences when it comes to protecting consumers or ensuring the safety and soundness of our nation’s financial institutions,” Date said.
If Cordray’s nomination fails to secure 60 votes in the Senate, Obama could move to appoint him to the position during winter recess. Such a move would be likely to draw the ire of congressional Republicans, who could seek to block Obama by holding brief “pro forma” sessions during the weeks when most lawmakers are away.