Battle Over CFPB Snags Other Regulatory Nominations
Although the push to confirm Richard Cordray to the Consumer Financial Protection Bureau failed, Democrats appear to gaining political ground and successfully portraying Republicans as too tied to Wall Street.
The Senate Banking Committee hearing on implementation of Dodd-Frank touched on a lot of core issues, such as capital requirements, the Volcker Rule and a risk retention proposal, but the pending Senate vote over the nomination of Richard Cordray to the CFPB overshadowed most of those issues.
The battle between Democrats and Republicans over the Consumer Financial Protection Bureau will come to a head this week when Senate Democrats hold a vote expected to fail on the confirmation of the bureau's first director. But observers said the vote, which is likely to be the first of many, plays into a White House strategy of painting Republicans as anti-consumer protection, and friends of Wall Street.
WASHINGTON - A group of House Democrats is pressuring Senate Minority Leader Mitch McConnell to allow a vote on the confirmation of a director for the Consumer Financial Protection Bureau.
On Capitol Hill and at the White House, Democrats tried Thursday to pressure Senate Republicans who have vowed to block the nomination of Richard Cordray to CFPB by citing the agency's inability to pursue nonbank lenders who prey on service members.
WASHINGTON — The partisan fight over the Consumer Financial Protection Bureau has snagged the nominations to head two other federal banking regulators.
Over the weekend, Senate Minority Leader Mitch McConnell refused to allow the confirmation of Martin Gruenberg to head the Federal Deposit Insurance Corp., Thomas Curry as comptroller of the currency, and Thomas Hoenig as the FDIC's vice-chairman, despite an agreement by the top Democrat and Republican on the Banking Committee to approve the three uncontroversial nominees as a package deal.
Speaking on the Senate floor on Saturday, McConnell explained his decision by saying that the Obama administration had not pledged to forego making recess appointments while the Senate was out of session. The Kentucky Republican said a slate of nominees would not move forward until President Obama made such a promise.
"I look forward to receiving this confirmation from the administration so we can go forward on this nominations package," McConnell said.
Senate Republicans have successfully blocked Richard Cordray's nomination to head the CFPB unless Democrats agree to change the bureau's structure.
Although McConnell did not mention the CFPB by name, GOP lawmakers have been worried the White House will attempt an end-run around the dispute by making a recess appointment over the Christmas holiday. They are also worried about the possibility of recess appointments to the National Labor Relations Board, among other issues.
A few hours before McConnell blocked the nominations, Sen. Richard Shelby, the top Republican on the Banking Committee, who had given his blessing to moving ahead with the three nominees, was asked by a reporter whether the FDIC and OCC nominations would be approved on Saturday.
"I don't know," Shelby responded, adding that the question should be posed to McConnell and Senate Majority Leader Harry Reid. "You know, they handle the floor."
On Monday, there was still guarded optimism among Senate Democrats that the FDIC and OCC nominations will move forward relatively soon.
"We remain hopeful that we will be able to confirm Mr. Gruenberg, Mr. Curry and Mr. Hoenig early in the new year," a Democratic staffer on the Senate Banking Committee said.
But McConnell offered no guarantees about what he will do next year. In general, Senate confirmation becomes a trickier proposition as a presidential election approaches.
It also may depend on whether President Obama makes a recess appointment. If so, Republicans are likely to retaliate by delaying some or all of Obama's pending nominees.
In the meantime, both the FDIC and the OCC remain in limbo. John Walsh has now been the acting comptroller for 16 months, while Gruenberg has been acting FDIC director since for five months. There's a widespread belief in Washington that government agencies have more clout when they have a Senate-confirmed leader.
Donald Ritchie, the Senate's official historian, said in an interview Monday that the weekend's maneuverings represent the latest chapter in a long-running battle with presidents over recess appointments.
"The parties have played pretty rough on this," he said. "It's been a tug of war between the Senate and presidents of both parties."
Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University, offered a harsh appraisal of McConnell's strategy.
"It's sabotage. That's the only word that I can think of," Hurley said.
In the past, Hurley said, senators would explain their refusal to confirm presidential nominees by noting that the nomination came during an election year.
"That was crass enough," he said. "Now they're doing it in a non-election year."
McConnell on Saturday held up not just the three nominees for financial regulatory posts, but also a slew of other nominees that Democrats were hoping to get approved before the Senate left town for Christmas.
With the House and Senate mired in a dispute over the terms of a payroll-tax cut extension, it is possible that the Senate will convene again before Christmas.
But the FDIC and OCC nominations appear to be on hold until at least Jan. 23, when the Senate is scheduled to reconvene.
It's not clear whether Obama wants to install Cordray via a recess appointment in any case. Doing so would likely put the CFPB under a legal cloud as it is unclear exactly which authorities it can exercise with a leader that has not been confirmed by the Senate. All of its actions would then be open to a legal challenge from industry groups like the Chamber of Commerce, which has warned the CFPB its powers are limited until the Senate acts.