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Financial Planning > Behavioral Finance

Senators at Odds Over Cordray’s CFPB Nomination

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Members of the Senate Banking Committee were at odds on Tuesday as to whether Richard Cordray is qualified to be the first director of the Consumer Financial Protection Bureau (CFPB). Cordray, who currently serves as head of the CFPB’s enforcement division, was nominated by President Obama on July 18 to serve as the bureau’s director.

A vote on Cordray’s nomination did not take place on Tuesday, and will be scheduled and announced at a later date.

sen. tim johnsonAt a hearing to consider Cordray’s nomination, Sen. Tim Johnson (left), D-S.D., chairman of the committee, said that a “vocal minority” of Senate Republicans “is playing games with the process and holding Mr. Cordray’s nomination hostage.” This political gamesmanship, he continued, “is preventing Americans from receiving the consumer protections they deserve.”

But Sen. Richard Shelby, R-Ala., ranking minority member on the committee, argued that the hearing was “premature” and that the Committee should not consider any nominee to be the director CFPB “until reforms are adopted to make the Bureau accountable to the American people.” Shelby cited the letter he and 43 of his Senate colleagues sent to President Obama expressing their “serious concerns” about the CFPB’s “lack of accountability.” The Senators, he said, proposed “three reasonable reforms” to the structure of the CFPB, including replacing the one director with a five-member board.

“All of the Bureau’s power is concentrated in the hands of its director,” said Shelby in his opening comments at the hearing. “The Director determines which rules are enacted and which enforcement actions are brought. The Director makes all hiring decisions and decides how the agency spends its resources. Because of the expansive jurisdiction of the Bureau, every American will be affected by the Director’s decisions.”

For instance, Shelby argued, the director “will single handedly determine the financial products consumers can buy, as well as which consumers have access to credit, and which do not. Accordingly, the director’s decisions will impact whether Americans can buy a home, a car or even basic household goods. It is staggering the amount of control the director will exert over the daily financial choices available to Americans.”

The chief architect of the CFPB, Elizabeth Warren, who was responsible for the day-to-day operations of the CFPB has left her post as the Special Advisor to the Secretary of the Treasury for the CFPB. That post is now held by Raj Date. Word on the street is that Warren is now contemplating a run for the Senate, challenging Scott Brown, R-Mass., for his seat in 2012.


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