Obama kicks off new fight over consumer watchdog

Carolyn Kaster/AP

President Obama’s re-nomination of Richard Cordray to head the Consumer Financial Protection Bureau reignites the battle that raged last year over the structure of the regulatory agency created under the landmark Dodd-Frank financial-reform law.

Republicans have criticized the consumer watchdog agency, which regulates products ranging from home mortgages to credit cards. Their chief complaints center on the fact that the agency is run by a director rather than a board. They also dislike the agency's funding mechanism. The Federal Reserve Board, rather than Congress, allocates money for its operations.

The GOP will use Cordray’s confirmation process to rehash these concerns. The politics will mirror the first go-around in 2011. Democrats picked up two Senate seats in November but still fall five short of the 60 that would be needed if Republicans decided to filibuster the appointment. Obama ended up using a recess appointment to install Cordray at the head of the agency last year, bypassing the GOP senators who opposed his nomination.

The White House is bracing for a fight. Asked if the Obama administration was expecting “clear sailing,” press secretary Jay Carney told reporters: “I wouldn’t want to predict an outcome except to say that there are no objections to him on substance.”

He's right. The dispute won’t be about Cordray. The credentials of the former Ohio attorney general,who was first nominated in July 2011, have never been the issue for Republicans.  He now has a year-long track record at the CFPB, but his approach at the agency has been surprisingly cautious and marked by a focus, at least initially, on the administrative challenges of getting the new agency off the ground. Cordray’s agenda, according to Mark Calabria, director of financial-regulation studies at the libertarian Cato Institute, was “exactly the political strategy one would pursue if you’re trying to build support" for the agency and soothe fears among key constituencies, such as the financial industry, about the agency's mission.

And indeed, the first round of Republican comments to the news that Obama had selected Cordray to head the agency once again didn't focus on the man, but the bureau. The current structure concentrates power in one person's hands, Republicans say. And they don't like it. “No one person, I believe, should have so much unfettered power over the American people,” Sen. Richard Shelby, R-Ala., said at a September 2011 hearing on Cordray’s nomination.

Other independent agencies, as Republicans will tell you, are run by boards: The Fed, the Securities and Exchange Commission, the Commodity Futures Trading Commission, to name a few. The CFPB is more of an outlier in that regard (executive departments, such as Treasury, are run by secretaries who are answerable to the president and removable at will).

Sen. Bob Corker, a Republican who sits on the Senate Banking Committee, said he respected Cordray "as a substantive person who has shown thoughtfulness in writing regulation up to now," but said he still disagreed with the agency's structure. The Banking Committee will be the first hurdle in Cordray’s confirmation process.

Sen. Mike Crapo, the expected ranking Republican on the Banking Committee, said Thursday that he would oppose “any nominee” to direct the agency unless “key structural changes” were made. “If the president is looking for a different outcome, the administration should use this as an opportunity to work with us on the critical reforms we have identified to him,” Crapo said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.