WASHINGTON Feb 1 U.S. Senate Republicans on
Friday pledged to block President Barack Obama's choice to lead
the consumer finance watchdog until Democrats agree to
restructure it, ramping up an expected fight this year over the
controversial new bureau.
The group of 43 Republicans, led by minority leader Mitch
McConnell of Kentucky and Mike Crapo, an Idaho senator who is
the top Republican on the banking committee, said the Consumer
Financial Protection Bureau lacks congressional oversight.
Last week, Obama re-nominated Richard Cordray to lead the
bureau. Cordray received a temporary appointment as director
last year, but his position expires at the end of 2013.
"As presently organized, the CFPB is insulated from
congressional oversight of its actions and its budget," the
Republicans said. "Far too much power is vested in the sole CFPB
director without any meaningful checks and balances."
The consumer bureau, which was created by the 2010
Dodd-Frank financial oversight law to oversee mortgage lending
and other sectors that played a role in the 2007-2009 financial
crisis, was controversial before it even opened its doors.
Republicans and business groups have criticized the bureau's
broad authority over a wide range of financial products, and
they want it to be funded by congressional appropriations rather
than through the Federal Reserve.
Republican senators blocked confirmation of a director when
the bureau opened in July 2011, saying it should be led by a
bipartisan board rather than a single director.
Obama used a procedural maneuver known as a "recess
appointment" to install Cordray at the helm in January 2012. But
business groups and Republicans pilloried the move because they
said Congress was not in recess at the time, instead holding
short meetings every few days with only a few lawmakers present.
One day after Obama nominated Cordray for a full term, an
appeals court added fuel to the opposition when it ruled that
similar recess appointments Obama made to another regulatory
body were unconstitutional.
That ruling did not directly involve Cordray, but experts
said the same logic could be used to challenge his appointment.
White House spokesman Jay Carney, who was asked about the
issue during a briefing for reporters on Friday, said he was not
aware of the letter but the bureau is a central component of
efforts to crack down on Wall Street misdeeds.
"The establishment of the Consumer Financial Protection
Bureau was to make sure that average Americans who do business
with and have dealings with financial institutions have somebody
in Washington looking out for their interest," Carney said.
Some Republicans and business groups have said they do not
oppose Cordray personally, saying he has been accessible and the
bureau has tried to incorporate comments from both industry and
consumer advocates in its rules.
But the senators said "common sense reforms" are needed
before they will confirm anyone to lead the bureau.
In addition to changing the structure and funding of the
bureau, the Republican senators repeated calls made in a 2011
letter to allow federal bank regulators to verify that any new
CFPB rules would not harm the safety and soundness of banks.
(Reporting By Emily Stephenson, Additional reporting by Roberta
Rampton; Editing by Neil Stempleman)