White House presses hard for consumer chief

WASHINGTON — The White House Wednesday warned that Republican opposition to the nomination of a chief for a new consumer watchdog agency left millions of Americans open to abuses from the finance industry.

Republicans are opposing the President Barack Obama's pick of former Ohio state official Richard Cordray to head the Consumer Financial Protection Bureau (CFPB), saying the agency lacks important accountability checks.

The White House cranked up an intense countrywide push for Cordray's nomination ahead of an expected Senate vote on confirming him on Thursday, which is widely expected to fall short of a required 60 vote supermajority.

The nomination of Cordray has turned into the latest test of wills between Obama and Republicans on Capitol Hill, with both sides seeking to use the showdown to their political advantage ahead of 2012 elections.

The CFPB has the power to referee lucrative mortgage and credit card markets on behalf of consumers.

Many Senate Republicans have said they will not confirm any CFPB chief without changes to a sweeping law passed last year regulating Wall Street banks and financial organizations, which set up the agency.

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

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.

"This non-bank sector has been the source of some of the most harmful, deceptive, unfair and predatory lending practices," said Wolin.

"Until a director is confirmed, these institutions will operate without supervision and oversight. That means millions of American people will remain vulnerable to the same regulatory gaps that helped create the financial crisis."

Republicans however say that though Cordray may be qualified for the job, there are important questions about the makeup of the agency and its lack of oversight by Congress.

"I am completely opposed to appointing a nominee to head this bureau until we correct the very serious structural flaws that are in the bill," said Republican Senator Susan Collins of Maine on Tuesday.

"To me, it is inconceivable that in this time of tight budgets that we would create a new agency that is completely unaccountable in terms of its budget."

Indiana Republican Senator Richard Lugar called the CFPB a case of "tremendous overregulation without any control by the Congress."

Republican senators asked Obama seven months ago for changes in the makeup of the CFPB, including the appointment of a board instead of a single director to oversee the bureau and for it to be subject to oversight by Congress.

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 Federal Reserve and not by Congress.

But 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.

Photo credit: Veronica V. Photography