Personal Finance

Senate Stalemate Keeps Consumer Protection Bureau Leaderless

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The first confirmation hearing to approve the leader of the Consumer Financial Protection Bureau confirmed only one thing:  The political stalemate surrounding the new agency is likely to continue indefinitely.

While Republican members of the Senate Banking Committee joined Democrats on Tuesday in praising Richard Cordray, the former Ohio attorney general who is President Obama’s nominee to become the bureau’s first director, they restated their intention to block any nominee until the President agrees to structural changes that would limit the bureau’s power.

[Related Article: Is Richard Cordray the New Elizabeth Warren?]

“You’re caught between a big substantive debate, and that’s going to have to be resolved before this moves forward,” Sen. Richard Shelby (R-Ala.), the committee’s ranking Republican, told Cordray during the hearing.

Republicans argue that the bureau’s structure places too much power in the hands of a solitary director. In a letter to Obama, 44 Republican Senators promised in May to block any nominee to lead the bureau until the bureau’s structure is changed and its power limited.

“The director will single-handedly determine the financial products that consumers can buy, as well as which consumers have access to credit and which do not,” Shelby read from a prepared statement during the hearing. “There is no meaningful check on the director’s authority.”

That’s not true, Democrats argue. Unlike any other financial regulator, the bureau’s decisions can be overruled by a panel of other agencies. In addition, Senator Sherrod Brown (D-Ohio) took time during the hearing to describe 12 separate checks and balances on the bureau’s power, including cost projections for all new rules required from the Office of Management and Budget, and reviews by the House, Senate, the Government Accountability Office and the judicial system.

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“This doesn’t sound unaccountable to me,” Brown said.

For his part, Cordray impressed members of both parties with his resume and experience. After his first job, flipping burgers and cleaning the parking lot of a McDonald’s in Grove City, Ohio for minimum wage, Cordray earned a law degree from the University of Chicago, an economics degree from Oxford University, clerked for two Supreme Court justices, and argued cases before the Ohio and U.S. Supreme Courts before winning a reputation as an advocate for consumers as treasurer and then attorney general of Ohio. We covered Cordray extensively in a feature story last week.

Cordray’s family also won senators’ attention. His 12-year-old twins, Danny and Holly, sat smiling behind Cordray as he spoke.

“If I had the smile of your son and daughter I’d win my election hands-down,” Senator Robert Menendez (D-N.J.) joked during the hearing.

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Image: Richard Cordray, via Wikimedia Commons

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