Senate Republicans said Tuesday the new Consumer Financial Protection bureau has too much unfettered power and President Barack Obama's choice to head the agency should not be approved.
But at a Senate Banking Committee confirmation hearing on Richard Cordray's nomination, Democrats said the GOP was playing political games aimed at scuttling the bureau's ability to protect consumers who borrow money or make other financial transactions.
"The misleading claim of no CFPB accountability — drummed up by special interests and put forth by a vocal minority — should be exposed for what it is: An attempt to destroy the bureau's ability to do its job of protecting American consumers," said Sen. Tim Johnson, D-S.D., the banking panel's chairman.
Obama nominated Cordray, 52, the former Ohio attorney general, to head the bureau in July, just as the agency was opening its doors for the first time. The president had appointed consumer advocate Elizabeth Warren to help set up the bureau, but decided not to nominate her to become its director in the face of strong opposition from Republicans, who considered her too much of an activist.
Republicans say the bureau's director will have too much power and other federal financial regulators would lack the ability to curb the bureau's actions, even if its rulings threaten to cause instability in the banking system. On Tuesday, they chided Obama and Senate Democrats for failing to seek compromise with them to restructure the agency.
"It may be good politics for them," Sen. Richard Shelby of Alabama, the panel's top Republican, said of Democrats' actions. "But it is certainly bad policy for the American people."
In May, 44 Senate Republicans signed a letter saying they will oppose any nominee without a revamping of the bureau that would include replacing the director with a bipartisan commission and giving Congress direct power over its budget.
Democrats who control the 100-member Senate can only count on 53 votes to end delaying tactics — seven short of the 60 needed to do so.
Cordray, who has been the bureau's enforcement chief, said his experience as Ohio attorney general taught him that litigation can be slow, costly and unnecessarily acrimonious. He said he would use lawsuits "judiciously," and noted that the bureau has other powers to resolve problems, including issuing rules, writing reports and examining large banks and many nonbank institutions.
In a bid to reach out to Republicans, Cordray also said that if confirmed, "I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress and I will always be keenly interested in your thoughts about how we should do our work."
The new bureau was created after the financial crisis of 2008. The bureau was a keystone of the market regulation overhaul that Obama pushed through Congress last year over solid GOP opposition. It is designed to protect consumers taking out loans, using credit cards and making other financial transactions.