Republicans Continue to Demand Changes to CFPB

President Obama nominated former Ohio attorney general Richard Cordray on Monday to lead the Consumer Financial Protection Bureau.  But congressional Republicans continue to say they'll hold up any nomination until the nascent CFPB undergoes fundamental changes.  (They also object to Cordray, who, some say, has been too tough on banks and their lending practices.)  Under the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last year, the Bureau is set to receive its full regulatory powers on Thursday, July 21.  But a lack of a confirmed leader will hamper its regulatory efforts.

Among the key changes that Republicans are demanding:

• Replace the single Director with a Board.  Republicans object that the Bureau has just one Senate-confrimed appointment--the Director--and that the Director has too much regulatory power under the Act.  A board would diffuse power.
• Take the CFPB's funding out from under the Federal Reserve and put it directly through the regular appropriations process.  Republicans say this will mean greater transparency and accountability for the Bureau.
• Allow the Financial Stability Oversight Council to set aside or to stay any regulation issued by the CFPB under certain circumstances.  This would mean that another body has veto power over the CFPB's actions.

While the changes might lead to a Bureau that is more answerable to Congress, they would also undercut the purposes of the Bureau: to ensure that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.

The Republicans' tactic--holding up any nomination until the Bureau changes fundamentally--is an effective and fully constitutional check on the administration (even if it seems to be refighting a lost legislative battle in Appointment Clause clothes).  But it can only go so far.  President Obama has said that he will fight any changes to the CFPB.  The Bureau is set to receive its full regulatory powers on Thursday.  And President Obama could always make a recess appointment in August, the next scheduled congressional break--a move advocated by some Democrats.  In other words, the Republicans' tactic may hold up the work of the Bureau, but it (alone) can't change it. 

SDS