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Just three days before the Consumer Financial Protection Bureau throws open its doors for business, President Barack Obama nominated former Ohio Attorney General Richard Cordray to head the new agency.
"We are going to stand up this bureau and ensure it is doing the right thing for middle class families all across the country," Obama said at a Rose Garden ceremony announcing his choice to direct the CFPB.
Cordray, 52, has been helping special presidential adviser Elizabeth Warren set up the bureau since he lost re-election as attorney general in November. Cordray, now head of enforcement at the CFPB, was elected Ohio state treasurer in 2007 and served two years in the Ohio legislature.
In choosing Cordray, Obama sidestepped Warren, who has spent the past year assembling the bureau amid stiff Republican opposition. Senate Minority Leader Mitch McConnell reiterated today that 44 Republican senators will block any nominee until the CFPB director is replaced with a five-member commission, and other steps are taken to weaken its power.
“Republicans have voiced our serious concerns over the creation of the CFPB because it represents a government-driven solution to a problem government helped create,” McConnell said. “We have no doubt that, without proper oversight, the CFPB will only multiply the kind of countless burdensome regulations that are holding our economy back right now, and that it will have countless unintended consequences for individuals and small businesses that constrict credit, stifle growth, and destroy jobs.
The Financial Stability Oversight Council, made up of major Wall Street regulators throughout the federal government, has the power to veto any CFPB decisions.
Consumer advocacy groups urged the Senate to quickly confirm Cordray so he can begin cracking down on predatory practices. But if the Senate won’t confirm Cordray, Obama should appoint him to head the CFPB during a Senate recess, Public Citizen, Americans for Financial Reform and other advocacy groups said.
Meanwhile, as the CFPB prepares for its ribbon-cutting on Thursday, a self-administered progress report suggests the bureau wishes it had more than a big pair of ceremonial scissors.
“The CFPB has been tasked with supervising more than twice the number of entities as all other federal bank supervisors combined, including supervising the largest, most complex banks,” the report says. “Although Congress provided the CFPB with a source of funding outside the appropriations process, the consumer bureau is nonetheless the only bank supervisor with a statutory cap on its primary source of funding.”
Created by the Dodd-Frank financial reform law, the bureau is supposed to get its annual budget directly from the Federal Reserve. However, House Republicans have ordered the Fed to cap how much it gives to the CFPB.
“I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis – and the recession and job losses that it sparked – began one lousy mortgage at a time,” Warren wrote on the White House website after the president announced his intention to nominate Cordray.
The CFPB’s authority to propose new regulations for payday lenders, car-title lenders and other non-banks will be limited until it has a confirmed director.
A series of stories published by iWatch News is examining challenges facing the CFPB as it tries to rein in abusive and predatory lending practices alleged by consumers.
On Thursday, along with its formal opening, the CFPB is expected to release studies on remittance transfers and consumer credit bureau scoring.
President Barack Obama announces the nomination of former Ohio Attorney General Richard Cordray as the first director of the Consumer Financial Protection Bureau. Manuel Balce Ceneta/The Associated Press
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