The Senate voted 53 to 45 to reject a procedural motion to begin debate on confirming Richard Cordray as the CFPB director. The motion required 60 votes to pass. Sen. Scott Brown (R-Mass.) was the lone Republican to side with Democrats in seeking to begin debate.
During a White House news conference after the vote, Obama wouldn’t rule out using a recess appointment to seat Cordray, though the GOP-controlled House could easily block that effort since the Constitution requires the Senate to obtain approval from the lower chamber when taking more than a three-day break.
“I just want to send a message to the Senate: We are not giving up on this,” President Obama said after the vote. “We’re going to keep on going at it. We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers being protected by unscrupulous financial operators.”
“The bottom line is we’re going to look at all of our options,” Obama said. “My hope and expectation is Republicans who blocked this nomination will come to their senses.”
Asked directly if he would consider a recess appointment of Cordray once the Senate adjourns, Obama said only, “I will not take any options off the table.”
The Consumer Financial Protection Bureau was created by the 2010 Dodd-Frank financial oversight law to police the market for consumer financial products such as credit cards and mortgages.
Congress, when both chambers were led by Democrats, created the CFPB to protect consumers against Wall Street banks and lenders who critics say took advantage of borrowers in the lead up to the 2007-2009 financial crisis.
Republicans are promising to block Cordray until changes are made to how the new agency operates.
Republicans say agreeing to the bureau changes they have outlined is the best way to make sure the new agency can start exercising its powers over all lenders.
In May Republicans promised to block the confirmation of any nominee to lead CFPB unless changes are made that they contend will make CFPB more accountable to Congress.
Republicans are now accusing Democrats of making no effort to negotiate with them, choosing instead to ramp up the political rhetoric in hopes it will buckle their will.
“Democrats are using the Senate floor this week to stage a little political theater. They’re setting up a vote they know will fail so they can act shocked about it later,” said Senate Minority Leader Mitch McConnell (R-Ky.). “Until this or any other president addresses these very legitimate concerns, we cannot and will not support a nominee.”
Democrats argue that Republicans’ real aim is to undermine the agency’s work altogether.
“This is the first time in Senate history a party has blocked a qualified candidate solely because they disagree with the existence of the agency,” said Senate Majority Leader Harry Reid (D-Nev.). “Republicans are doing this to undermine the system of law we have in our country.”
“In other words, to protect their Wall Street friends, they’re not going to allow a director to be in place unless you weaken this agency,” said Sen. Sherrod Brown (D-Ohio), who sits on the Senate Banking, Housing and Urban Affairs Committee. Republicans are “almost always flacking for Wall Street. It never ceases to amaze me.”
Some Democrats are calling on Obama to use his authority to bypass the Senate and make Cordray the director when the chamber goes on a recess.
Obama in July nominated Cordray to be the first director of the Consumer Financial Protection Bureau.
Raj Date, special advisor to the Secretary of the Treasury at CFPB, called Cordray an “exceptional leader” and praised his work at the bureau thus far.
“I have the great privilege of working with Rich every day,” said Date. “The CFPB is already hard at work, helping to fix broken consumer financial markets. But without a director, we are only able to supervise banks, not any of the nonbank companies that were responsible for many of the most problematic products and practices leading up to the financial crisis.”
Democrats have cast him as a man who can stand up for the little guy, as demonstrated by his moves against big banks over their mortgage practices when he was Ohio attorney general.
Republicans maintain their problem is not with Cordray but with the structure of the bureau.
They want the CFPB run by a board, rather than a director, and believe its budget should be approved by Congress. They also advocate giving other regulators more authority to veto its regulations.
Deputy Treasury Secretary Neal Wolin briefed reporters on Wednesday on how the lack of a director hampers the agency.
“Without a director, the CFPB cannot oversee payday lenders, private student loan providers and other nonbank lenders, including certain mortgage originators and servicers, as well as debt collectors and credit reporting agencies,” Wolin said.
“This nonbank sector has been the source of some of the most harmful, deceptive, unfair and predatory lending practices. And until a director is confirmed, these institutions will operate without supervision and oversight, just like before the crisis.” [via Huffington Post, Reuters, Politico and Los Angeles Times]