[Adds comment from President Obama speech]
Sen. Richard Shelby, R-Ala., said Republicans would continue to block Richard Cordray as director of the Consumer Financial Protection Bureau even as the White House renewed efforts to get its nominee approved.
The Senate Banking Committee approved Cordray as director in October, but a group of 44 Republicans led by Shelby filibustered a vote for the Senate floor until their demands are met to reform the bureau structure. They want a five-member panel to run the CFPB instead of a director and a simple majority vote for an oversight council to veto any bureau rules instead of the current two-thirds vote.
The White House and Treasury Secretary Tim Geithner began pressing specific Republicans in recent days and have secured a wide vote on Thursday, but Cordray’s approval is still in question.
“We informed the president that we will not approve a director until legislative changes are made,” Shelby said during a committee hearing Tuesday.
Democrats on the committee responded, expressing frustration with the Republican blockade of the CFPB implementation after a bipartisan Congress approved the structure under the Dodd-Frank Act more than one year ago. The bureau will become the de facto regulator for the mortgage industry from origination through servicing.
“It’s time for the Senate to understand something about majority rule,” said Sen. Robert Menendez, D-N.J. “It is time to allow for an up or down vote on Cordray and get us moving forward.”
Rep. Sherrod Brown, D-Ohio, said blocking a vote on an agency nominee because of a disagreement on how the agency is structured is a first for Congress.
“One political party has blocked a nominee because they don’t like the makeup of the agency,” Brown said. “That just doesn’t make sense. It’s unprecedented.”
Some executives at smaller banks testified before the House Financial Services Committee Monday supporting the Republican reforms, claiming the regulations will push more firms toward merger or sale.
The CFPB would also take over supervision of nonbank financial institutions, some directly in competition with smaller banks. But without a director, these firms would enjoy a significant advantage over community banks.
Treasury Deputy Secretary Neal Wolin testified Tuesday before the Senate committee, urging Republicans to reconsider Cordray.
“As senators get to know Mr. Cordray, we believe they will find that he is an ideal candidate to lead the CFPB, and that his measured, sensible approach to the CFPB’s work will allay concerns some senators have expressed regarding the CFPB’s operation in the future,” Wolin said.
President Obama said Tuesday afternoon that any new bill to change the structure of the CFPB would not make it past his desk.
“Consumers deserve to have someone whose job it is to look out for them,” Obama said. “I intend to make sure they do, and I will veto any effort to delay, defund, or dismantle the new rules we put in place.”
Write to Jon Prior.
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