Obama scolds Republicans on blocked consumer chief

WASHINGTON — US President Barack Obama on Thursday scolded his Republican critics for blocking his nominee to lead a new consumer watchdog agency tasked with protecting Americans from finance industry abuses.

In a rare appearance in the White House briefing room, Obama pressed his political foes to "come to their senses" and confirm former Ohio state official Richard Cordray to lead the Consumer Financial Protection Bureau (CFPB).

"I don't think there's any American out there who thinks that the reason we got into the big financial mess that we did was because of too much regulation of Wall Street or the financial services industry," he said.

"I take it back. I'm sure there are some folks in the financial service industry who make that argument, although I'm not sure that they make it with a straight face," he added.

Obama's angry remarks came after Republican opposition stalled Cordray's nomination in the US Senate, where a mostly party-line 53-45 vote to end debate on his confirmation fell short of the 60 votes required.

The embattled US president, whose handling of the economy will decide whether voters give him a second term in November 2012 elections, refused to rule out using his power to appoint Cordray when lawmakers break for year-end holidays.

"We are not giving up on this," said Obama. "We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers being protected by unscrupulous financial operators."

Republicans overwhelmingly opposed the law that created the agency but say they will oppose the confirmation of Cordray -- or anyone else -- until Democrats agree to modify the bureau in ways they say would improve its accountability.

Democrats counter that the Republican proposal aims to gut the bureau's power to referee lucrative mortgage and credit card markets on behalf of consumers in the wake of the 2007-2008 global financial meltdown.

"Everybody supports strong and effective oversight, but that has to include the overseers," Republican Senate Minority Leader Mitch McConnell said before the vote. "Unelected bureaucrats must be held accountable."

But Senate Banking Committee Chairman Tim Johnson, a Democrat, accused Republicans of trying to "hijack this constitutional process and demand as ransom legislative changes that would hamstring the consumer agency."

Republicans have called for replacing the post with a board of directors, subjecting the bureau to annual congressional spending bills rather than being able to set its own budget under a set cap, and enhancing the ability of other financial regulators to overrule any rules proposed by the bureau.

Cordray's nomination has turned into the latest test of wills between the president and Republicans on Capitol Hill, with both sides seeking to use the showdown to their political advantage ahead of elections.

The Republican approach "continues to leave the door wide open for the same abuses that occurred prior to and were an important cause of the financial crisis," Deputy Treasury Secretary Neal Wolin said Wednesday.

He said that without a director, the CFPB could not oversee payday loan firms, student loan providers and other non-bank lenders including some mortgage firms and servicers.

But critics argue the agency will bind banks in red tape, stifling innovation that has made lending cheaper and more affordable. They also object to it being funded through the US Federal Reserve and not by Congress.

Administration officials argue that Republicans had months to debate the makeup of the agency before the financial regulatory reforms were passed, and should now fall into line and confirm Cordray, whose qualifications they do not question.