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From Banking and Finance Law Daily, July 16, 2013

Senate confirms Richard Cordray as CFPB Director

By John M. Pachkowski, J.D.

On July 16, 2013, the U.S. Senate voted 66 to 34 to confirm Richard Cordray to be Director of the Consumer Financial Protection Bureau.

Earlier in the day, the Senate voted 71 to 29 to end debate on the Cordray nomination. Following Senate Resolution 15, the Senate was supposed to have up to eight hours of post-cloture debate.

The vote came after a July 15, 2013, meeting of 98 senators that sought to forge an agreement to avoid the so-called “nuclear option,” which would have ended filibusters of presidential nominees for executive branch positions.

Good for the Senate. In floor statements leading up to the cloture vote, Sen. John McCain (R-Ariz) noted that the Monday night meeting was a “productive discussion” on resolving issues. Senate Majority Leader Harry Reid (D-Nev) noted this was “not a time to flex muscles” and was appreciative of Sen. McCain’s “advocacy and persistence.” Reid concluded that compromise was “good for the Senate.” Senator Bob Corker (R-Tenn), a member of the Senate Banking Committee, noted that after moving past the cloture vote on Richard Cordray it was time to “work constructively” on the country’s problems.

Appropriate congressional oversight. Senator Mike Enzi (R-Wyo), in a speech on the Senate floor, stated, “I cannot in good conscience, with these concerns weighing so heavily on my mind, support moving forward the confirmation of a Director to the Consumer Financial Protection Bureau unless we can make some changes that will balance consumer protections with privacy protections, and allow a healthy and appropriate level of congressional oversight over an agency that wields this tremendous power.”

In a June 18, 2013, hearing on the CFPB budget before the House Subcommittee on Oversight and Investigations, Stephen Agostini, the bureau’s chief financial officer, noted, “The Bureau welcomes rigorous Congressional oversight, as demonstrated by our testimony at 35 Congressional hearings since our creation. We appreciate the opportunity to testify again today.”

American people win. Following the cloture vote, Senate Banking Committee Chairman Tim Johnson (D-SD) issued a statement calling the vote “a win for the American people, and Majority Leader Reid should be commended for taking a principled stand in support of consumer protection. Rich Cordray is finally getting the up-or-down vote he deserves. Rich has proven to be effective leader and I have no doubt he will now be confirmed.”

Remain vigilant. Senator Sherrod Brown, a member of the Senate Banking Committee, noted, “Today is a great day for Rich and his family and the Bureau. But we must remain vigilant and ensure that Wall Street and its allies in Congress never undermine the authority and effectiveness of this vital agency.”

CFPB-IG. Senator Rob Portman (R-Ohio) said he intends to introduce a bill to create a dedicated, Senate-confirmed Inspector General (IG) for the CFPB. Under current law, the CFPB has to share an IG with the Federal Reserve Board. Portman noted, “Unlike most major agency IGs, the Federal Reserve IG is a “designated federal entity IG” hired by the Fed Chairman, rather than appointed by the President with the advice and consent of the Senate.” He added, “I hope the White House and Rich join me in pushing for this commonsense, bipartisan reform.” In post-cloture debate, Sen. Chuck Grassley (R-Iowa) called for an independent IG for the bureau due to the structure of the CFPB and the burdens placed on the Fed’s IG. Gassley noted, “My concern is that if you have one Inspector General trying to cover two different entities, the end result is that neither gets fully overseen.”

Fighting for people. Senator Elizabeth Warren (D-Mass) released a statement that was to be delivered on the Senate floor. She stated, “The agency has become the watchdog that so many of us fought for. And Rich has surpassed even the high expectations I had for him the day two years ago that I stood next to him in the Rose Garden as the President first announced his nomination to the CFPB.” Sensing a filibuster of Cordray’s nomination, Warren added, “So let me be clear to those who think this filibuster will shut down the work of the new agency, let me be crystal clear. The Consumer Financial Protection Bureau is the law and it is here to stay. Do your dirtiest with obstructing the confirmation of the Director, but the agency will keep on doing what it does best: fighting for people.”

Work to be done. In a floor statement following the cloture vote, Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) raised concerns over the structure of the CFPB, its efforts to collect data, and the manner in which it issues its regulatory pronouncements. Crapo noted that at least twice, Republican senators have raised concerns over the structure of the CFPB, citing letters from May 2011 and February 2013.

House appearance. Following confirmation, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that the committee will now call on Cordray to testify on the CFPB’s semi-annual report as “soon as practicable.” Hensarling added, “His confirmation, however, does not change the fact that the CFPB lacks the most basic semblance of accountability and transparency that hardworking taxpayers deserve from government agencies.”

MainStory: TopStory CFPB DoddFrankAct

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