President Obama has side-stepped Congressional gridlock and appointed Richard Cordray as the head of the Consumer Financial Protection Bureau today. The 112th Congress, which has come to be defined by this sort of obstructionism, has avoided voting on the appointment in a protest against the existence of the CFPB.

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Republicans don’t oppose the appointment of Cordray himself, who was Attorney General of Ohio for two years and state treasurer before that (so his qualifications are not the issue), but rather they dislike the CFPB on ideological grounds: the agency should not have been created in its current form by the Dodd-Frank bill. They believe it has too few checks on its powers.

Republican opposition is to the agency, not the man, which they believe will over-regulate and hinder the financial industry; President Obama and other Democrats believe the agency will provide much-needed regulatory oversight and consumer protection to an under-regulated industry.

The President appointed Cordray while Congress is in recess, despite the fact that Republicans have been holding pro forma sessions so that Congress is not technically in recess. According to the Senate website, pro forma sessions are “sometimes only several seconds” long. It’s a cynical procedural move to prevent the President from moving forward on his legislative goals.

By ignoring this procedural tactic, the President is setting himself up for potential litigation over the appointment, but at the very least his proponents will be pleased to see him standing up against Congressional obstructionism, even if his move is procedural, too. Republicans have blocked appointments time and time again (The Nation estimated 20% of Obama’s appointees had been blocked by Congress, back in June of this year), often for no reason but to make it difficult for the President to do his job.

Blocking Cordray’s nomination fits right into this pattern.

Cordray, for his part, promised a Senate committee that if appointed to head the CFPB, he would cut back on regulations that make the banking business difficult for banks, and would thereby make it easier for banks to lend to customers, the New York Times reported in September. His argument did nothing to persuade Republican opponents, who believe that the CFPB will “wield unchecked authority over banks and other financial institutions,” according to the report.

Republicans’ concerns about the Bureau are laid out in more detail in this letter from Alabama’s Richard Shelby, co-signed by 43 other Republicans. In short, they want the CFPB to have no director in order to make sure the director does not politicize the Bureau’s goals, to be subject to the Congressional appropriations process (which is never politicized!), and to create another regulatory check that would prevent the CFPB from creating regulations that cause banks to fail. They want the agency weakened, for ideological reasons.

If Congressional Republicans are right about the CFPB’s “unchecked’ powers we will find out in due time, as the CFPB will finally be up and running after months in director-less limbo. Given the sort of projects they have started in the preceding months — creating simple mortgage disclosure forms and a portal to file complaints about your credit card — it does not seem likely that the CFPB will abuse its position to hinder the banking industry. It’s a consumer protection agency, not some sleeper cell hell-bent on destroying the economy.

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  • Dillon Davis

    If one feels that big business is the salvation to all our ills, it’s a bad move and there will be much crying.  On the other hand, if one feels that big business is more part of the problem than the solution, there will be much cheering.   The conservatives do it, the liberals do it, damn, I’m still stuck in the middle!