By Emily Stephenson
WASHINGTON, July 16 The U.S. Senate on Tuesday
confirmed a director of the Consumer Financial Protection
Bureau, ending a nearly two-year standoff in Congress and
putting the new agency on sounder legal footing.
Democrats overcame long-held Republican objections to
approve Richard Cordray's nomination to head the bureau, which
was created by the 2010 Dodd-Frank Wall Street reform law.
Bureau advocates and consumer law experts said Senate
confirmation clears up a number of questions, including
Cordray's legal status as the temporary bureau director and the
agency's authority to oversee certain financial sectors such as
"There is no doubt that the consumer agency will survive
beyond the crib," Senator Elizabeth Warren told reporters
earlier on Tuesday. Warren, a Massachusetts Democrat, set up the
consumer bureau before running for the Senate last year.
The consumer bureau, which opened in 2011 and oversees
mortgages, credit cards and other consumer-oriented financial
products, had been a source of controversy since its creation.
Opponents said it has too much authority over a wide array
of financial products. Others said it should be run by a
bipartisan board rather than by a single director and funded
through the congressional appropriations process instead of the
In the face of fierce Republican resistance about the
agency's structure, President Barack Obama in early 2012
installed Cordray as director through a controversial "recess
Experts said they do not expect the existence of a confirmed
director will unleash a much more aggressive posture from the
already active agency.
So far, financial industry representatives have said the
bureau has not been as overbearing as they feared, noting the
CFPB has communicated with them about new regulations and has
been open to suggestions about how to improve its rules.
"At the same time, removing the big legal threat that a lack
of a confirmed director created...over their heads I think gives
them greater confidence, particularly in the nonbank
marketplace," said Ed Mierzwinski of US PIRG, a consumer
Critics of the agency had argued that Dodd-Frank appeared to
require that the CFPB have a confirmed director before it could
exercise its authority outside of responsibilities explicitly
mentioned in the law. Those areas include debt collection and
credit reporting agencies.
Larry Platt, a partner at K&L Gates law firm in Washington,
said the financial services industry has been acting under the
assumption that the bureau's rules would stand, so it would not
be rattled by Cordray's confirmation.
"The industry itself had to pretend that none of this was
happening," Platt said. "It's not as if any industry participant
could refuse to follow new guidance simply because they thought
the guidance was illegitimate."
In its first two years, the agency has passed rules to make
mortgage applications easier to understand and lending less
risky, warned auto lenders on discriminatory rates, and has
hinted at a crackdown on the payday lending industry.
It has also issued a number of enforcement actions, with a
particular focus on credit card companies for deceptive
"Today's action brings added certainty to the industries we
oversee and reinforces our responsibility to stand on the side
of consumers and see that they are treated fairly in the
financial marketplace," Cordray said in a statement.
LEGAL CHALLENGE, COMPROMISE
The confusion surrounding Cordray's position as director
stemmed from the recess appointment move, with Republicans
arguing the Senate was not truly on a recess, and therefore
appointments made at that time were illegitimate.
Legal challenges to other recess appointments made by Obama
had raised questions of whether Cordray's standing could come
On Tuesday, the Senate voted 66-34 to confirm Cordray, with
12 Republicans voting in favor of his nomination.
Earlier in the day, Democrats had threatened to change
Senate rules for confirmations unless they got enough Republican
votes to pass the 60-vote threshold to avert a filibuster on
Cordray and other long-stalled nominations made by Obama.
"This is a watchdog of Wall Street for the American
consumer. That's the vote that we just had," Senator Harry Reid,
the top Democrat, said after the Senate voted to close debate
and move to a final decision. He also called Cordray a "very,
very brilliant man."
Republican Senator Rob Portman of Ohio said some of his
concerns were relieved after Cordray agreed to testify before
the Senate Appropriations Committee, even though the consumer
bureau's funding mechanism would not change.
Portman also said he would introduce a bill to create a
separate inspector general at the bureau in an effort to boost
oversight. Currently, the agency is overseen by the Federal
Reserve's inspector general.
Warren and another Senate Democrat said they would not
oppose Portman's effort but would block any moves to weaken the