This week’s U.S. Senate confirmation of Richard Cordray as director of the Consumer Financial Protection Bureau ends an almost three-year fight that cast a pall over the agency created by the 2010 Dodd-Frank Act.
The 66-34 vote Tuesday lifts the threat of legal challenges to the bureau’s rules and enforcement actions since some of the agency’s powers, including those over nonbank financial firms, take effect only under a confirmed director.
“The political stalemate is over,” said Sen. Elizabeth Warren, the Massachusetts Democrat who conceived the idea for the agency and was President Barack Obama’s first choice to lead it. “There’s no doubt that the consumer agency will survive beyond the crib. There is now no doubt that the American people will have a strong watchdog in Washington.”
Obama said Wednesday that Cordray’s installation gives consumers a stronger footing “for years to come” in dealings with banks and credit card companies.
Banks and financial firms opposed creation of the bureau, which was established with the explicit aim of regulating the kind of risky consumer financial products that contributed to the 2008 financial crisis. Isaac Boltansky, an analyst with Compass Point Research & Trading LLC in Washington, said he expects the agency to remain a lightning rod for controversy.
“Cordray’s confirmation will remove a meaningful operational cloud that has hovered over the CFPB for three years, but there is no reason to believe that the political rhetoric surrounding the agency will subside,” Boltansky said.
Cordray thanked Obama and senators for his confirmation. “It’s all I ever asked for, all I ever worked for was the chance to have an up-or-down vote on the merits,” he said.
Sen. Bob Corker, R-Tenn., said he would still push for changes to the consumer bureau’s structure that he said could come when his party is in the majority. The next round of Senate elections are in November 2014.
“There wasn’t any way to make it happen prior to this nomination coming up,” Corker said. “There’s a possibility that some additional structural changes take place.”
Sen. Jeff Merkley, D-Ore., said the Senate deal ensures that the consumer bureau will take shape as the authors of Dodd-Frank intended.
“For two years, since it was formed, there has been a battle over whether it would be fully formed and become a part of the landscape, the executive branch landscape, defending the rights of Americans against predatory practices,” Merkley said. “That question is answered.”
Republican senators refused for more than two years to permit a confirmation vote on Cordray, demanding that the bureau be restructured to put more curbs on the director’s power and impose congressional controls over the agency’s budget.
“They don’t like the fact that this first-ever financial watchdog with the explicit mission of protecting consumers instead of bankers is doing exactly what it is supposed to,” said Lisa Donner, executive director of Americans for Financial Reform, an umbrella group of labor unions, civil rights groups and consumer advocates.
Over the last three years, Republicans accused the agency of being unaccountable and overly powerful, spending too much money, and collecting too much data on American consumers.
The agency has also written rules aimed at cleaning up the mortgage market that was at the heart of the financial crisis. The new regulations cover underwriting, servicing and loan officer incentives.