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UPDATE 1-Senate banking panel to hold CFPB nominee hearing
July 28, 2011 / 10:41 PM / 6 years ago

UPDATE 1-Senate banking panel to hold CFPB nominee hearing

* Nomination hearing scheduled for August 4

* Republicans threaten to block nominee (Adds Johnson quote and background)

By Dave Clarke

WASHINGTON, July 28 (Reuters) - The Senate Banking Committee will hold a hearing on Aug. 4 on the nomination of Richard Cordray to lead the new Consumer Financial Protection Bureau.

Earlier this month President Obama nominated Cordray, a former Ohio attorney general, to be the bureau’s first director.

Republicans, however, have promised to block Cordray from being confirmed unless changes are made to the structure of the bureau that Democrats oppose.

“With next week’s hearing, I will begin the process of moving Mr. Cordray’s nomination forward to confirmation,” Senate Banking Committee Chairman Tim Johnson said in a statement. “The CFPB opened its doors as an independent agency on July 21st, and it is off to a strong start promoting an equitable and transparent consumer financial marketplace. However, until it has a Director, the CFPB will not be able to use its full powers to protect consumers and level the playing field for community banks and credit unions.”

Until the agency has a director in place it cannot, for instance, police non-bank lenders like payday lenders.

Liberal groups and many Democrats were upset that Obama did not nominate Harvard law school professor Elizabeth Warren for the director job and are now pushing her to run for the U.S. Senate in Massachusetts against Republican Scott Brown.

Warren conceived the idea for the agency and has been setting it up for the administration since last year. She is leaving the administration on Aug. 1 to return to Harvard.

Before considering any nominee for the fledgling agency Republicans have demanded that the bureau’s leadership be changed to a board instead of a single director, the agency’s budget be subject to congressional approval, and other financial regulators have a greater say in the agency’s oversight of banks.

Republicans contend these changes will make it more like other regulators but Democrats have shot back that it is a naked attempt to weaken an agency they oppose.

Given the impasse, some Democrats are pushing Obama to bypass the Senate and appoint Cordray to the job when the Senate goes on recess -- the next congressional break is scheduled for August.

The drawback to this approach is he could only hold the job for about 1-1/2 years as opposed to five.

Supporters have touted the bureau, which will police products like mortgages and credit cards, as a cop on the beat who can prevent the type of problems in lending markets that helped lead to the 2007-2009 financial crisis.

The agency was opposed by the banking industry and many Republicans who contend it will have virtually unchecked power and could restrict banks’ ability to lend. (Reporting by Dave Clarke; Editing by Steve Orlofsky, Bernard Orr)

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