Richard Cordray Officially Confirmed as Director of CFPB in Senate Vote

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The U.S. Senate late Tuesday confirmed the nomination of Richard Cordray as head of the Consumer Financial Protection Bureau (CFPB). On a 66-34 vote, Cordray became the first Director of the consumer financial watchdog agency created by the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010.

The Senate avoided a self-inflicted meltdown late Monday night when the two political parties reached a deal to allow votes on several stalled executive nominations, including Cordray. His confirmation was the first in an expected series of votes to approve appointments long-stalled by Republicans seeking structural changes to some regulatory agencies.

In deference to Senate Majority Leader Harry Reid’s (D-Nev.) threats to change Senate rules to prohibit the use of filibusters to block nominees — the so-called “nuclear option” — Republicans allowed the vote to take place in exchange for no alteration of parliamentary rules. Two nominees to the National Labor Relations Board also will be withdrawn and replaced with new appointees.

Senate Republicans have been blocking votes on seven of President Obama’s nominees to various appointed positions using the filibuster. But the block on Cordray was the most divisive. Senators voted 71-29 on Tuesday to end the filibuster on Cordray, paving the way for the official confirmation vote hours later.

With official Senate approval of a Director, the CFPB’s full regulatory mandate can be executed. According to the law which created it, the CFPB had to have a director in place before many of its powers could be tapped. Although Cordray has been Director for nearly a year and a half, his lack of Senate approval hung over the operations of the watchdog. Many of the CFPB’s detractors hoped that preventing a confirmation would pave the way to unwind the agency.

“With Director Cordray’s confirmation, we will be able to say loudly, clearly, and with confidence:  the consumer agency is the law of the land and is here to stay,” said Sen. Elizabeth Warren (D-Mass.), who created and then championed the CFPB more than three years ago.  “We fought hard for the agency, and we proved that big change is still possible in Washington.”

The CFPB Wednesday posted a video message on its blog from Cordray addressing the confirmation:

Almost immediately following the news of the deal, Republicans in the Senate moved to continue their attempts to fix what they say are fundamental structural issues with the CFPB. Sen. Rob Portman (R-Ohio) announced his intention to bring legislation creating an official inspector general (IG)for the CFPB.

“Given the CFPB’s insulation from congressional oversight, it is critical that it have a dedicated, Senate-confirmed internal watchdog – just as the IRS Restructuring and Reform Act of 1998 created an independent IG for tax administration to ensure robust oversight,” said Portman.  “Given the important role we’ve seen an IG play in the IRS scandal, creating an independent IG dedicated to this large bureaucracy with vast powers is a commonsense step we can take to ensure greater transparency and accountability at the CFPB.  I hope the White House and Rich join me in pushing for this commonsense, bipartisan reform.”

While the CFPB does not currently have a dedicated inspector general, the IG responsible for the Federal Reserve does have domain over the Bureau’s activities. The CFPB is an independent unit operating within and funded by the Fed.

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 five-member commission at the top of the CFPB — similar to the power structure at the Federal Trade Commission — and more Congressional oversight. Obama used his recess appointment authority to install Cordray shortly after the 2012 new year while the Senate was in recess.

But the move 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.

One court case on a similar move by Obama has been decided, however. The U.S. Court of Appeals for the D.C. Circuit ruled in February that the President’s other recess appointments at the same time, to the National Labor Relations Board (NLRB), were unconstitutional. Those nominees were the ones withdrawn in the deal reached Monday.

Obama re-nominated Cordray earlier this year. Shortly thereafter, Senate Republicans ramped up their efforts to stall the nomination and directly address the CFPB authority by introducing bills and sending a letter to President Obama.

 

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Posted in CFPB, Collection Laws and Regulations, Featured Post .

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