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Senate blocks CFPB nominee

By Claes Bell, CFA · Bankrate.com
Thursday, December 8, 2011
Posted: 1 pm ET

Banks and nonbank financial providers can breath a little easier, at least for the time being.

Today Senate Republicans blocked a vote to confirm former Ohio Attorney General Richard Cordray to lead the Consumer Financial Protection Bureau, citing Democrat's unwillingness to restructure the agency.

Republican leaders are looking to limit the power of the CFPB, created under the Dodd-Frank financial reform law, by replacing the director with a commission and requiring it to seek funding from Congress every year, rather than get its budget from the Federal Reserve.

The failed nomination will likely hamstring the CFPB for the foreseeable future, as it needs a confirmed director to fully exercise its rule-making powers over firms that provide financial services to consumers.

The Obama administration had been pushing hard for Cordray's nomination this week, citing the need to level the playing field between banks and nonbank financial service providers such as check-cashing stores. The administration had argued that while banks have to comply with tough new regulations under Dodd-Frank, nonbank financial service companies don't receive the same level of scrutiny from regulators, giving them an unfair advantage.

Now we'll likely see a push for President Obama to make a recess appointment, which would allow Cordray to begin working as director without Senate confirmation.

Any way you slice it, though, this seems like a loss for consumers.

What do you think? Do we need the CFPB? Should it be restructured, and if so, how?

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