WASHINGTON -- It may have been mostly for show, but the Senate Banking Committee on Tuesday held its nomination hearing for Richard Cordray, President Barack Obama's embattled pick to run the Consumer Financial Protection Bureau.
Nearly all Senate Republicans have vowed to block Cordray, or any nominee to the post, until Democrats agree to make structural changes to the new consumer watchdog agency. In May, 44 Senate Republicans sent a letter to Obama saying the current structure of CFPB "violates basic principles of accountability and our democratic values."
Specifically, in exchange for considering Cordray, Republicans are demanding three changes to CFPB: create a board of directors, subject the bureau to the annual appropriations process and establish "a safety-and-soundness check" to give other regulators more authority over bureau regulations. And those obstacles loomed large in Tuesday's hearing.
Sen. Richard Shelby (R-Ala.), the committee's ranking member, opened the hearing by reiterating his and other Republicans' opposition to standing up the CFPB without those changes.
"I don't think it will surprise anyone to hear that we believe that today's hearing is quite premature," Shelby said.
He called it "regrettable" that Obama went ahead and tapped Cordray for the post in July "rather than work with us" to make changes to CFPB first.
"It may be good politics for them, but it is certainly bad policy for the American people," Shelby said.
But Democrats countered that the independent bureau, which opened its doors on July 21, is already accountable to Congress and that its structure was already negotiated by both parties in the 2010 debate on the Dodd-Frank financial oversight bill. What's really going on, they said, are GOP delay tactics meant to weaken the agency altogether.
"This notion of 'let's wait until we get it perfect before we appoint somebody' would have delayed, I think, the election of George Washington for many decades," said Sen. Jack Reed (D-R.I.). "We've got to move forward."
Other Democrats on the committee accused their GOP counterparts of being sore losers over passage of last year's sweeping financial reform legislation. The measure passed with bipartisan support, but it drew strong resistance from Republicans who said the consumer watchdog bureau amounted to regulatory overreach. Formed in response to the housing crisis, CFPB is charged with regulating the mortgage, credit card and payday lending industries that dragged the economy into a recession.
"Some of our colleagues want to reopen last year's debate," said Sen. Charles Schumer (D-N.Y.). "Because they couldn't win it through the ordinary legislative process, they have promised to block this nomination or any nomination until they get their way. It is hijacking the legislative process."
For now, Cordray, who currently heads up enforcement for CFPB and who has yet to draw criticisms from either party on his own merits, remains caught in the crossfire of a larger fight about the role of the agency. On Tuesday, the former Ohio attorney general steered clear of political questions from Republicans about the need for more checks and balances at CFPB.
"I have not sought to inject myself in legislative discussions that may be between the Congress and the president," he told the committee. "Our role there is to take the laws that Congress has enacted, whatever they may be, and to enforce them to the letter. And that's what we're trying to do."
Cordray told Democrats he had "good, cordial meetings" with Republicans on the committee in advance of the hearing. He said none told him "they have problems with my qualifications."
Senators on the committee have until Friday to submit questions to Cordray, at which point he will submit responses and the committee will reconvene at a later date to vote on his nomination. The bottom line, however, is that he will only advance if the administration and Republicans can agree to some kind of compromise on how the CFPB operates.
Harvard Law School professor Elizabeth Warren, the architect of CFPB, was originally considered the top candidate to run the bureau. But Republicans signaled they would firmly oppose her nomination, in part because they said she was too liberal and too critical of the banking industry to fairly regulate it. She has recently resurfaced as a possible Democratic challenger to Sen. Scott Brown (R-Mass.).