In what was surely one of the stranger Senate confirmation hearings in recent history, President Obama’s nominee to head the Consumer Financial Protection bureau, Richard Cordray, testified Tuesday before the Committee on Banking, Housing and Urban Affairs.
Unlike most nomination hearings, which focus on the merits of the nominee, the committee could not agree on whether the position itself should exist. Forty-four Senate Republicans sent a letter to President Obama in May that demanded a five-person board with appointees from both parties run the CFPB, instead of a single director.
Tuesday, only two of the committee’s Republicans showed up to the hearing—Senator Richard Shelby, the ranking member, and Senator Bob Corker. Shelby declined to even question Cordray, blasted the hearing in his opening statement as “premature” and said “we do not believe that the committee should consider any nominee to be the director of the CFPB until reforms are adopted to make the bureau accountable to the American people.”
Shelby, who has taken $6.2 million from the financial sector during his career, and his fellow Republicans are demanding not only to remove the position of director but to force the CFPB to submit a budget to Congress and accept additional veto powers from other bank regulators. The Republican line of attack is that, without these regulations, the CFPB will be a runaway regulatory train straight out of Glenn Beck’s nightmares.
“The director will be virtually free of any constraints on his authority during his five-year term. No one person should have so much unfettered power over the American people,” Shelby said during the hearing. “It blatantly violates the spirit of our democratic system of government…. unless the Bureau is reformed, it is only a matter of time before this concentration of power is abused or misused to the detriment of American consumers and the economy.”
Senator Sherrod Brown said he consulted the Senate historian, who could not come up with a similar case of one party opposing not the nominee but the very office to which he or she was appointed. Brown and the other Democrats urged a quick confirmation for Cordray, and hammered on the point that the structure of the CFPB was already put up for a vote and decided in 2010, and so Cordray should receive an up or down vote on his own merits.
“Now is not the time to undermine an agency that a bipartisan majority in Congress created,” Brown said. “It is not the time to play a dangerous game with the financial security of millions of families and businesses.”
Senator Jack Reed lamented that consumer voices were “seldom heard in Washington,” and added that “as we go forward, we are trying to ensure that we do not replicate the crisis of 2008—that we do not have financial collapse.”
For his part, Cordray offered somewhat vanilla testimony about his resume and life story. He made overtures to the financial sector by pledging not to automatically regulate via lawsuits, which he called “a very slow, wasteful and needlessly acrimonious way to resolve a problem.” But he added that “if people are ignoring or evading consumer protections laws—and seeking to gain an unfair advantage over their law-abiding competitors—then litigation is an essential tool, and we will use it judiciously.”
As Ari Berman has outlined, the $3 trillion financial services industry is waging a fierce battle against the CFPB, which for some in the business community amounts to a “holy jihad.” Cordray will likely clear the Democrat-controlled Banking Committee, but will surely face a Republican filibuster after that.