Consumer watchdog nomination "held hostage:" White House

WASHINGTON Thu Nov 3, 2011 4:53pm EDT

U.S. President Barack Obama (L) announces that Richard Cordray is his choice to serve as the first Director of the Consumer Financial Protection Bureau, in the Rose Garden of the White House in Washington, July 18, 2011.              REUTERS/Larry Downing

U.S. President Barack Obama (L) announces that Richard Cordray is his choice to serve as the first Director of the Consumer Financial Protection Bureau, in the Rose Garden of the White House in Washington, July 18, 2011.

Credit: Reuters/Larry Downing

WASHINGTON (Reuters) - The White House charged on Thursday that the nomination of President Barack Obama's choice to head a new consumer financial protection agency was being "held hostage" by Republicans as it sought to tap into public anger at Wall Street excess.

Trying to ratchet up pressure on Republicans who have blocked Richard Cordray's Senate confirmation, administration officials insisted Americans would be denied full safeguards against abusive business practices until he is in place as director of the Consumer Financial Protection Bureau.

Obama and his aides have struck an increasingly populist tone as he steps up his 2012 re-election campaign against the backdrop of protests against corporate greed and economic inequality that began weeks ago in New York and have spread to other cities.

Republicans opposed creation of the agency, a centerpiece of Obama's Wall Street rules overhaul after the 2007-2009 financial markets meltdown, as a regulatory overreach and demand changes before letting Cordray's nomination move ahead.

Obama adviser Stephanie Cutter urged Republicans to "do the right thing by consumers" but offered no new path to confirmation of Cordray, a former Ohio attorney general, to head an agency set up to police abuses in areas like credit cards and mortgages.

"Part of our strategy for getting him confirmed is to point out what we're not able to get it done because of their obstructions," she said in a conference call she and other administration officials held with reporters.

Cordray was nominated by Obama in July and won support of the Senate banking committee in a vote along party lines on October 6, but Democrats have yet to set a date for a confirmation vote by the full Senate

Obama's choice of Cordray was meant to sidestep the controversy he would have faced had he nominated Wall Street critic Elizabeth Warren, who is credited with conceiving the idea for the new consumer agency. But Cordray is considered a close Warren ally.

PRESSURE CAMPAIGN

In the 100-members Senate where 60 votes are required on most issues, 44 Republicans vowed in May to block confirmation unless the agency's leadership was changed to a board instead of a single director and other modifications were made. "So Richard Cordray's nomination is being held hostage by these 44 Republican senators," Cutter said.

The White House briefing was timed to coincide with a CFPB official's congressional testimony on the need for an empowered agency to fight financial abuses faced by military families.

Obama and his aides have used a similar approach of accusing Republicans of obstructionism in efforts to push through the president's $447 billion job creation plans -- a strategy that has so far failed to make headway.

Cutter acknowledged that with just six weeks left in the current congressional term, it might not work with Cordray's nomination either.

But she brushed aside the notion that Obama would try to put Cordray in place with a "recess appointment" to bypass Republicans while Congress is out of session, as some of his Democrats have urged. She also said Obama would oppose any effort to weaken the agency.

"The sentiments that lots of people who are out there as part of 'Occupy Wall Street' -- not just on Wall Street but on Main Streets across the country -- those sentiments are shared by lots of Americans," she said. "Having Richard Cordray in place obviously would help them."

Obama -- whose poll numbers have fallen over his handling of the stagnant economy and high unemployment -- has voiced sympathy with the grievances of "Occupy Wall Street" but has done so cautiously, not least because of his own economic team's ties to the financial industry.

(Editing by Vicki Allen)

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