U.S. President Barack Obama Thursday announced that he will once again nominate Richard Cordray as Director of the Consumer Financial Protection Bureau (CFPB) and ask the Senate to confirm his appointment.
Cordray is the current Director of the Bureau, but his recess appointment a year ago by the President has led to ongoing legal challenges and general feelings of ill will among the CFPB’s detractors.
Obama noted in a press conference Wednesday that he wants Cordray to have the position for years to come. “He can’t stay on the job unless the Senate finally gives him the confirmation he deserves,” the President said.
Cordray was nominated in July 2011 to head the CFPB. But Senate Republicans blocked a vote on his confirmation for months as they tried to change the structure of the new agency to include a commission and more Congressional oversight. Obama used his recess appointment authority to install Cordray shortly after the new year 2012 while the Senate was in recess.
But the move has led to legal challenges, as Republicans insist they were not in recess. They had devised a plan to call pro forma sessions of Congress every third day specifically to block Cordray’s appointment. There is at least one ongoing lawsuit challenging Cordray’s appointment and authority to lead the CFPB.
The move on Thursday does put to rest concerns of a power vacuum at the top of the CFPB. As the former Attorney General of Ohio, Cordray was on a very short list to challenge current Ohio Governor John Kasich in 2014, a move that would have taken him out of Washington. And late last year, the CFPB announced that its deputy director, Raj Date, was leaving the agency at the end of January. Since Cordray’s current appointment runs through the end of this year, only Date’s spot will need to be filled.
Senate Republicans vowed to fight the nomination.
“Until key structural changes are made to the bureau to ensure accountability and transparency, I will continue my opposition to any nominee for director, as outlined in a letter signed by 45 Republican Senators to the president,” wrote Sen. Mike Crapo (R-Idaho), ranking member of the Senate Banking Committee, on his Senate web page Thursday. “If the president is looking for a different outcome, the administration should use this as an opportunity to work with us on the critical reforms we have identified to him.”
Crapo and other Republicans want to eliminate the Director position at the CFPB and replace it with a five-member panel, similar to the structure of the FTC. Opponents also want the Bureau’s funding to be appropriated by Congress. Currently, the CFPB is funded through the Federal Reserve and is not subject to Congressional oversight for appropriations.
Since Democrats hold a solid majority in the Senate, it is expected Republicans will once again use the filibuster to block a vote on Cordray’s nomination.
The fight comes in a very important year for the ARM industry and its relationship with the CFPB.
Active supervision and examination of larger debt collection industry participants began in January. And the Bureau is expected to begin collecting consumer complaints about debt collectors in the second quarter of this year. The nomination fight should not impact either, however, as Cordray will serve as Director through the end of 2013 under his current term.