WASHINGTON President Obama’s nomination of recess appointee Richard Cordray this afternoon to a full five-term as director of the Consumer Financial Protection Bureau is expected to rekindle the battle over creation of the new consumer agency, which was heatedly opposed by Republicans in Congress.
“It’s going to be a battle,” said John McKechnie, a long-time credit union lobbyist, who noted the President’s bypassing the Senate confirmation process a year ago to avoid Republican opposition to seating a director for the new agency in the face of questions about its structure and funding. “Republican opposition is not changed from last year.”
NAFCU’s Chief Lobbyist Dan Berger noted that Cordray starts the confirmation process from a difficult position because the President angered the Republicans in the Senate by bypassing their opposition and appointing Cordray as a so-called recess appointment, while the Senate was supposed to be out of session. “Some senators (mostly likely Republicans) may try to block his confirmation because they object to the recess appointment and the bypassing of the senate process and their stamp of approval,” said Berger.
Sen. Mike Crapo, the leading Republican on the Senate Banking Committee, said today he will oppose the Cordray nomination.Crapo said he will oppose any nominee to direct the CFPB unless changes are made to the agency’s structure, such as such as having it run by a board of directors and having its budget approved annually by Congress. “Today’s decision to renominate Richard Cordray to be director of the Consumer Financial Protection Bureau after using an unconstitutional recess appointment is premature, given the outstanding concerns about the bureau and the legal challenge to the recess appointment,” Crapo said.
The Cordray appointment was the center of last year’s debate over the structure of the CFPB, which was created as part of the 2010 Dodd-Frank Act. The Republicans in the Senate, which must vote to confirm the director, all agreed they would not approve any director until the President and the Democrats agreed to change the structure of the agency to be overseen instead by a five-person board and to give Congress greater authority over the new agency’s funding. The Republicans’ opposition made it impossible for the Democrats to obtain the 60 Senate votes necessary to override a Republican filibuster on a permanent CFPB director.
The stalemate convinced Elizabeth Warren, who was hired by the President to organize the new agency, to leave the CFPB and return to Massachusetts, where she was elected herself to the Senate last fall, landing on the Senate Banking Committee, which will hear the Cordray nomination first.
The numbers have changed in this Congress to favor Democrats, who can now count on 57 votes, 55 Democrats and two independents, meaning they need just three Republicans to overcome a filibuster.
Without confirmation, Cordray’s recess appointment will expire at the end of this year.
NAFCU’s Berger said he believes the best strategy to get Cordray confirmed as director is for Cordray to be part of a grand deal that turns the CFPB into a 3 or 5 member commission with Cordray as the likely chairman. “From what has been indicated to us from numerous sources is the administration would be amenable to this type of deal as long as CFPB continues to be funded outside the congressional appropriations process,” Berger said.
House Republicans, who will not vote on the nomination, expressed opposition to the Cordray bid. “President Obama’s alleged recess appointment of Mr. Cordray last year was, at best, a highly controversial and legally questionable maneuver,” said Rep. Jeb Hensarling, chairman of the Financial Services Committee. “The Dodd-Frank Act places vast, unprecedented and unchecked power completely in the hands of a single person. The CFPB director has the power to decide whether American families can obtain a mortgage, get a car loan or even get a credit card. My hope is that the decision to renominate Mr. Cordray will open the debate about whether some common sense checks and balances will be placed on a massive bureaucracy that is now totally unaccountable to the American people.”
