October 7, 2011A Senate panel's Oct. 6 approval of Richard Cordray's nomination for promotion to full-time director of the Consumer Financial Protection Bureau has energized consumer activist organizations, but minority Republicans who for months have vowed to block any nominee show no signs of letting up.
By a 12-10 party-line vote, Democrats on the Senate Banking, Housing and Urban Development Committee agreed to floor action on President Obama's nominee, who has been serving as the fledgling agency's enforcement chief. "Mr. Cordray has proven he is qualified for the job," said Sen. Tim Johnson, D-S.D., chairman of the committee. "Unfortunately, Senate Republicans are blocking his confirmation, and in doing so they are blocking vital new protections for consumers, and putting community banks and credit unions at a disadvantage to their less regulated competitors."
The vote was "premature," said Sen. Richard Shelby, R-Ala., the panel's ranking member. "No nominee for the director of the Bureau of Consumer Financial Protection should receive consideration until the Democrats are ready to stop playing politics and work with us to make the bureau accountable."
Consumer groups are planning a public relations blitz to capitalize on some recent events to ratchet up pressure on GOP senators who, since writing a letter to Obama on the bureau last spring, have vowed to prevent the seating of a director until they get changes in the agency's governing and oversight structure as laid out in the 2010 Dodd-Frank financial reform law.
"In the last two weeks, the Bank of America [debit card] fees, the Occupy Wall Street movement and the president becoming engaged have helped shine a light on the nomination," said Ed Mierzwinski, director of the Consumer Program at U.S. PIRG. "I'm an optimist. Once it gets to the floor, we will have a bigger megaphone to talk outside the Beltway about who's blocking this nomination."
A coalition of major nonprofits, unions and consumer advocates called Americans for Financial Reform is circulating an online petition calling on senators to back Cordray because "American families want and need someone to level the playing field and prevent tricks and traps in the financial services market," said Executive Director Lisa Donner, in a statement.
"The Senate floor schedule is extremely full," the coalition's communications director, John Carey, told Government Executive. "An up-or-down vote needs to happen before mid-November."
Travis Plunkett, legislative director of the Consumer Federation of America, said, "Fourteen months after Congress created the CFPB, the agency needs a permanent leader so it can move forcefully and use all of its powers to address mounting problems in the financial services marketplace."
During his White House press conference on Oct. 6 before the Senate panel voted, Obama referred to Cordray as "a guy who is well-regarded in his home state of Ohio, has been the treasurer of Ohio [and] the attorney general of Ohio. Republicans and Democrats in Ohio all say that he is a serious person who looks out for consumers. He has a good reputation. And Republicans have threatened not to confirm him not because of anything he's done, but because they want to roll back the whole notion of having a consumer watchdog."
Senate Minority Leader Mitch McConnell, R-Ky., in speaking to reporters on Sept. 7, promised a filibuster of Cordray. "Remember, this is a new entity that answers to no one, that can determine essentially on its own if any entity in America is a systemic risk," McConnell said. "This is an extraordinarily powerful entity, and it ought to answer to at least somebody."
Speaking against the nomination after the vote, David Hirschmann, president and chief executive officer of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, said, "We are disappointed that the committee's majority members decided to move forward with the director nomination without taking seriously the calls for reforms that would institute much needed traditional, long-standing checks and balances. The chamber believes the CFPB can play an important role by simplifying disclosure for consumers and by streamlining the complicated multiagency regulatory system faced by companies doing business in the consumer finance space, but there is also the potential for the bureau to become an impediment to economic growth and job creation. Today's vote will do nothing to help us get answers to basic questions we have about how this agency will work."
Agency executives, meanwhile, have continued their consumer education campaigns in such areas as mortgage application forms, credit cards, student lending and checking accounts. Raj Date, the special adviser to the Treasury secretary for the CFBP, on Sept. 15 spoke on "Lessons Learned From the Financial Crisis: The Need for the CFPB" at the Constitution Center in Philadelphia. "We've assembled a great team at the bureau, with the analytical talent to make fact-based decisions on how to prioritize our efforts," he said.
Holly Petraeus, who runs a division at CFPB and is the wife of newly installed CIA Director David Petraeus, published an op-ed in The New York Times detailing the troubles of returning military veterans and their families dealing with potential exploitation by for-profit colleges.
"She is a tremendous voice," Mierzwinski said in praising Petraeus' work in educating veterans about potential abuses by such financial entities as payday lenders. But until the CFPB has "full authority and power, all Holly Petraeus can do is give speeches," he said. "A bad credit report can cause the loss of a security clearance. So military morale and unit cohesion, and ability to fight wars are harmed" by the lack of a fully empowered CFPB.
Many consumer groups believe Republican opposition to Cordray is based on politics and lobbying on the part of large banks more than problems with the agency's mission.
But Sen. Bob Corker, R-Tenn., a member of the banking panel, said, "Boards of directors serve an important function, and that's why regulators, nonprofits, corporations and universities all have them. We are simply asking that this enormously powerful new agency have checks and balances in place that protect the country from an overly zealous director."
October 7, 2011