Congressional Hearing or Hostage Negotiations: Cordray's Nomination for Director of the Consumer Financial Protection Bureau
Partisan politics are alive and well in Washington. The fate of the Consumer Financial Protection Bureau (CFPB) is being held hostage by 44 Republican senators who won't budge until they get their way.
The CFPB was established by the Dodd-Frank Wall Street Reform Act to provide oversight of and enforce laws about the consumer financial market. Although President Obama nominated former Ohio Attornery General Richard Cordray to be the CFPB’s Director of the CFPB earlier this summer, the agency officially opened its doors July 21, 2011, without a confirmed director. Yet, without a director the CFPB cannot fully protect consumers since, by statute, it cannot enforce laws against “non-bank financial intuitions such as pay day lenders” and other members of the predatory fringe financial markets until a director has been confirmed.
Last Tuesday, during Cordray’s nomination hearing, the ranking Republican on the Senate Banking panel, Senator Richard Shelby, called the hearing "premature," saying that the panel shouldn't be considering any nominee until Democrats take their demands for accountability more seriously. Republicans are blocking Cordray's nomination not because of his credentials, but rather as part of a power play with the White House. Even before Cordray’s nomination, 44 Republican senators sent the President a letter stating that they refused to vote for anyone to become the Director unless they get what they want --- restructuring of the CFPB to make it less powerful.
Illinois Senator Mark Kirk is among the 44 senators opposing Cordray's nomination. Kirk was also one of only six senators who supported legislation to repeal the Dodd-Frank Act in its entirety, as well as bills to create a board structure for the CFPB instead of a single-director structure. Obviously Kirk is neither listening to his constituents nor looking out for their financial well-being. According to a recent AARP and Center for Responsible Lending poll, 74 % of all respondents (including 73% Independents and 68% Republicans) responded affirmatively that they support having a single agency with the mission of protecting consumers from financial companies.
Richard Cordray is caught in the middle of these outlandish political tactics. As a result, the American people are not getting the protection from financial markets that they should be getting and that the Dodd-Frank Act requires. As Representative Barney Frank, a Massachusetts Democrat who was one of the chief authors of the law that created the bureau, explained, Republican opposition is the legislative equivalent of an “arsonist having set a fire and objecting to a building’s inhabitants using the fire exit.”
During the confirmation hearing Senator Bob Corker, a Tennessee Republican, said that his big opposition to the CFPB is that there's no way to challenge a decision by the consumer bureau, unless a particular rule "threatens the stability of the financial system." Under current law the bureau can be overturned by a two-thirds vote of a panel of financial regulators if any of its regulations threaten the stability of the financial system, which Corker called a "high hurdle." When asked by Senator Corker if Cordray thought that veto power over the bureau's decisions was a high hurdle, Cordray replied "It is a high hurdle, but not an inappropriate one." Consumer advocates agree.
The Shriver Center, along with Woodstock Institute and Illinois PIRG, issued a joint statement prior to the hearing explaining that a strong, independent agency is needed because banking regulators were more concerned about the health of financial firms than about consumer abuses, such as subprime mortgages, in the years leading up to the housing market crash. As the groups stated: “If Senate Republicans fail to vote for Cordray … it will prove that they still favor a flawed financial system over ordinary Americans … and [is] another indication that they are willing to resort to extortion … to get their way even to the detriment of a fair financial system and the still fragile economic recovery.”
It’s beyond time that politicians stop focusing on their agendas and start keeping their constituents’ needs in sight instead.
