The fight over the controversial new governmental consumer finance watchdog agency continues two days before the agency is set to open its doors and commence its supervision of financial services companies.
In Senate hearings held Tuesday, Richard Shelby, the ranking Republican on the Banking Committee, reiterated his determination to block confirmation of former Ohio Attorney General Richard Cordray as head of the new Consumer Financial Protection Bureau, arguing the agency’s single-director structure is unaccountable.
“Given the fundamental flaws with the existing structure of the Bureau … the Senate should not confirm any person to lead the Bureau until some reasonable reforms are adopted,” Shelby said in opening remarks at the hearing. Shelby, with support from the financial services industry, claims the current arrangement gives “unfettered power” to a single director. Republicans and allies in the banking industry want to see a board or commission structure rather than a single director.
In his opening remarks, Senate Banking Committee Chairman Tim Johnson (left), D-S.D., advised his colleagues that past regulatory failures “brought the global financial system to near collapse” resulting in “the loss of millions of American jobs, millions of homes, and trillions of dollars in retirement, college and other savings.” Johnson said it would be “irresponsible” to undermine the new agency.
Representing the American Bankers Association, Albert Kelly, the chairman and CEO of SpiritBank of Bristow, Okla., echoed Shelby’s call for restructuring the new bureau, and called for an expanded board to include members with consumer business experience and safety and soundness regulatory expertise.
The thrust of Republican and industry opposition, though, remained the broad discretion a single director would have in running the agency. “Dodd-Frank gave the Bureau expansive new quasi-legislative powers and discretion to re-write the rules of the consumer financial services industry based on its own initiative and conclusions about the needs of consumers,” said Kelly in his testimony.