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NJ Daily / BANKING AND FINANCE

White House, GOP Fight Over Consumer Bureau

Republican Senate aides say the administration is not reaching out to discuss their concerns over the nomination of Richard Cordray, right, to head the Consumer Financial Protection Bureau.(AP Photo/Manuel Balce Ceneta)

photo of Stacy Kaper
December 5, 2011

The White House this week is ratcheting up its attack against Republicans opposed to a new consumer-protection bureau, aiming to paint the GOP as the party of Wall Street ahead of the 2012 elections. But beyond a media blitz targeting GOP senators who might be hurt by the charge that they’re being obstructionist, the Obama administration is shy on tools to get its bureau nominee confirmed.

Nearly a year and half after the Dodd-Frank financial reform was signed into law, establishing the Consumer Financial Protection Bureau to shelter consumers from abusive financial dealings, the Senate is likely to vote for the first time this week on a director to lead the agency. Even though they’re in the minority, Republicans will continue their aggressive use of procedural rules, in this case to block a motion to proceed, likely on Thursday, without even considering a vote on the nominee, Richard Cordray.

The GOP’s audacious move matters because the lack of a director has real impact. Under the law, the bureau cannot enforce its powers against non-bank financial players like mortgage brokers, debt collectors, and payday lenders without a director in place.

 

So ahead of this week’s Senate action, President Obama and senior White House officials will talk about the issue, repeatedly.

On Tuesday, Obama will deliver a speech in Osawatomie, Kan., site of a famed economic address by Teddy Roosevelt, to discuss his vision of fairness. The White House is targeting press in Alaska, Indiana, Iowa, Maine, Nevada, Tennessee, and Utah on the issue, offering up the president for interviews with local media where he will cast GOP senators as more aligned with big banks than with average Americans.

What the White House is not doing, however, is illustrative. According to Republican Senate aides, the administration is not reaching out to discuss their concerns over the Cordray nomination or negotiating with individual GOP senators to persuade them to change their vote.

That, policy analysts said, is because Obama and his reelection team think they can capitalize on the issue whether Cordray is confirmed or not. If Republicans can be shamed into lifting their opposition and Cordray is confirmed, that’s a win for the White House. If not, Democrats see political opportunity in blaming the GOP for thwarting financial protections.

“The administration thinks this is a winning issue for them, especially in some close states,” said Brian Gardner, an analyst with Keefe, Bruyette & Woods.

Much of the problem is of the administration’s own making. The White House spent months dithering over whether to nominate the bureau’s controversial visionary, Elizabeth Warren, as the agency’s first director. They balked and Warren herself is now seeking the Democratic nomination for Senate in Massachusetts.

During that time, opposition to the agency mounted, and 44 Senate Republicans signed a letter in May promising to oppose any director until several structural changes were made to the agency—marking perhaps a new high-water mark in congressional acrimony: the refusal to confirm an agency head unless the agency is remade. Sen. Richard Shelby, R-Ala., the top Republican on the Senate Banking Committee and the lawmaker who has led the GOP effort to block any nominee to the bureau, says the administration has refused to meet with him.

Shelby and all but two Senate Republicans—Sens. Scott Brown of Massachusetts and Lisa Murkowski of Alaska did not sign the May letter—have called for subjecting the bureau to appropriations, giving prudential regulators more sway to veto its actions and to morph its director-led structure into a five-person commission.

When Treasury Secretary Timothy Geithner was asked about whether the administration was courting any specific senators at a press conference on the bureau on Thursday, he sidestepped the question, saying, “Our strategy is to try to make the case as compelling as we can.”

Consumer advocacy groups praised the administration’s strategy to draw attention to the issue now so that voters will have a chance to see which members are fighting against consumers’ interests.

“The strategy here from our perspective is put people on the record,” said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group. “We’ll have to see what happens next year, but we don’t think the public is going to support politicians who want to see Wall Street run amok.”

 

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