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Consumer Financial Protection Bureau Nominee Cordray Faces Senate Battle

December 7, 2011 at 12:00 AM EST
Richard Cordray, President Obama's latest pick to lead the new Consumer Financial Protection Bureau, faces an uphill battle for confirmation in the Senate this week. Judy Woodruff discusses the nomination and disagreement over the new agency's structure with Sen. Sherrod Brown, D-Ohio, and Sen. Kay Bailey Hutchison, R-Texas.
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JUDY WOODRUFF: And to the debate over the new U.S. financial watchdog agency. President Obama’s pick to lead it faces a critical test vote.

A Senate showdown is looming tomorrow over who will lead the new Consumer Financial Protection Bureau. The agency was created under the financial reform law, the so-called Dodd-Frank act, to oversee mortgages, credit cards and other forms of consumer lending.

And last July…

PRESIDENT BARACK OBAMA: I look forward to working with Richard Cordray as this bureau stands up on behalf of consumers all across the country.

JUDY WOODRUFF: … President Obama nominated a former Ohio state attorney general to be the agency’s first director. Consumer advocates had favored Elizabeth Warren, who helped assemble the agency. But the Harvard professor, now running for the U.S. Senate in Massachusetts, was fiercely opposed by the financial industry.

And back in May, 44 of the 47 Senate Republicans wrote to the president with several requests, including for the bureau to have a board of directors, instead of a single administrator.

Alabama Sen. Richard Shelby raised the issue at a hearing Tuesday.

SEN. RICHARD SHELBY, R-Ala.: This massive new bureaucracy was designed by the drafters of Dodd-Frank to be virtually unaccountable to the American people. Before we spend hundreds of millions of dollars on a new federal government agency, I believe we should ensure that it can be held accountable for its actions.

JUDY WOODRUFF: But while that hearing was under way, the president was in Osawatomie, Kan., warning against further delay in putting somebody in charge of the new agency.

BARACK OBAMA: Does anybody here think that the problem that led to our financial crisis was too much oversight of mortgage lenders or debt collectors?

MAN: No!

AUDIENCE: No!

BARACK OBAMA: Of course not. Every day we go without a consumer watchdog is another day when a student, or a senior citizen, or a member of our Armed forces — because they are very vulnerable to some of this stuff — could be tricked into a loan that they can’t afford — something that happens all the time.

JUDY WOODRUFF: White House officials have been working to win over Republican senators in seven states, Alaska, Indiana, Iowa, Maine, Nevada, Tennessee and Utah, in a bid to get Cordray confirmed.

That remains a tall order. The administration will need the backing of 60 senators to get past a filibuster and bring the Cordray nomination to a final vote.

And joining us now to discuss the Cordray nomination are Democratic Sen. Sherrod Brown of Ohio, a member of the Banking Committee, and Republican Sen. Kay Bailey Hutchison of Texas.

Thank you both for being with us.

Sen. Brown, I’m going to start with you.

Why is this bureau so important to have, and why is Richard Cordray the right person to lead it?

SEN. SHERROD BROWN, D-Ohio: I probably know Richard Cordray better than any member of the Senate. I knew him when he was a state legislator, and county treasurer, and state treasurer, and attorney general, and now at the bureau.

And he is qualified immensely — imminently qualified. And that’s what Republicans and Democrats alike, including the former Republican senator from Ohio Mike DeWine, who is now the attorney general, and others have endorsed him in both parties and banks and credit unions and all.

This matters because we know what happened in the financial crisis and we need a consumer cop on the beat. We need somebody that is responsive, somebody that will stand up to Wall Street, somebody that will stand up for consumers. And why would we not do that and want a good, strong, independent voice representing people who have been hurt by this financial crisis?

JUDY WOODRUFF: Sen. Hutchison, why is that the wrong argument, and why is Cordray not the right person?

SEN. KAY BAILEY HUTCHISON, R-Texas: You know, we really are not arguing about Mr. Cordray. I think he does have qualifications, if we could get this structure, set so that there would be an accountability in this agency, which there is not.

It’s unprecedented, the power that was put in this agency, and it doesn’t even go through the appropriations process. There is no oversight. They just have the ability to go into the Federal Reserve and take up to 10 percent of the Federal Reserve’s revenues.

Well, that’s just stunning. We need to have an agency that is run by a head, a board, that appoints the director, and then that director has to respond to the board.

And the other thing, Judy, is we are so worried about the overkill in this. We have prudential regulators in the banking and lending industries now. That has been cleaned up. We have the comptroller. We have the Fed. We have the FDIC. Another layer of bureaucracy is going to cost consumers more, and it’s not going to be more protective.

JUDY WOODRUFF: Well, let me take those points one at a time.

Sen. Brown, what about her first point, that this is an unprecedented amount of power, that this is someone who essentially would give no one else oversight over this bureau?

SEN. SHERROD BROWN: Unprecedented amount of power doesn’t really — doesn’t really make sense.

The Fed — the Consumer Bureau today was in Cleveland announcing — happened to be in my state — announcing new rules for making credit card applications more clear and more concise and simpler for customers.

That’s not giving — that’s not unprecedented power. What’s unprecedented, Judy, is — I asked a Senate historian several months ago, has this ever happened, where one political party has opposed a nominee solely because they don’t like the agency over which he — which he will run? And the Senate historian said that has never happened.

Accountability is not accountability to Wall Street, but to the public. And in many ways, my colleagues here that oppose the whole idea of consumer protection moved the goalposts. They first said they wanted it not independent, so we agreed to put it in the Fed. Then they said anybody but Elizabeth Warren, so we put — so the president appointed Richard Cordray.

And then they said that, we don’t want the president to do a recess appointment, so he didn’t. And now they’re still opposing it, and they said they’d oppose anybody because they don’t like the agency itself. Well, maybe that’s because the agency will stand up to special interests a little more than my colleagues want them to.

JUDY WOODRUFF: Well, before I ask you about the other point from Sen. Hutchison about too many layers, Sen. Hutchison, what about those points that Sen. Brown just made, that the Republicans have just continued, in his words, to move the goalposts on this nomination?

SEN. KAY BAILEY HUTCHISON: Well, of course, the president should never make an appointment that bypasses Congress. And he’s done it on several occasions, and it’s wrong, and that really bypasses the accountability that we’re looking for in this agency that we don’t have.

We tried to fix this bill when it was going through Congress and put some parameters around this agency. But, in fact, there is no oversight on this agency. They set their own budget without any oversight going through the appropriations process in Congress. And they have the ability to tell the Fed, you have to give us up to 10 percent, which is $600 million.

We have already given this agency $150 million. They have now asked for an increase to $329 million. Now, keep in mind, Judy, that the areas that Sherrod was talking about are already regulated.

JUDY WOODRUFF: Well, let me stop you there and ask Sen. Brown about that.

Sen. Brown, what about her point? She’s repeated the point that this is an agent that has the right to go in and take a lot of appropriations out of the Federal Reserve.

SEN. SHERROD BROWN: Well, they’re not going to take that kind of money. That’s — that’s the kind of thing that it’s just — it’s a straw man argument.

What — this went through the whole legislative process. We needed 60 votes to pass this bill. There were all kinds of amendments that were considered. Conservative members of the Senate who don’t — who were kind of close to Wall Street and didn’t really want the Consumer Bureau had their chance to amend it, went through the whole process just two years ago. It got more than 60 votes out of 100. So it passed with strong bipartisan majorities.

And now that it’s the law, on behalf of Wall Street, they want to weaken the rules and emasculate the agency. This is a consumer agency. They’re not going to use their power to destroy. They’re going to use their power to protect consumers and use their power to protect investors and use their power to protect taxpayers. And that’s what I want them there for.

JUDY WOODRUFF: Sen. Hutchison, why aren’t most of the Republicans in the Senate prepared simply to allow an up-or-down vote on Richard Cordray?

SEN. KAY BAILEY HUTCHISON: Because we want to get the changes to the structure of this amorphous body before we put a head in there that has the powers of one person, one dictator, who doesn’t even respond to anyone, except the president of the United States, who agreed with this approach.

You know, Sherrod said, oh, they’re never going to ask for $600 million. This agency has been in place for less than a year, and they have already asked for half that, $329 million, for another big federal agency.

And this isn’t Wall Street. It’s not Wall Street that is causing us to want to put parameters around this agency. We don’t want the over-regulation of banks and companies that are over-regulated already with another layer that’s going to cost consumers more.

JUDY WOODRUFF: Did you mean, Sen. Hutchison, to use the term dictator?

SEN. KAY BAILEY HUTCHISON: Well, it’s one person. And I’m not talking about him personally.

I’m just saying one person who answers to no one except the president of the United States, it is unprecedented. I would like to ask the Senate historian, have you ever seen an agency that was created that could take money directly from the Fed, that didn’t have a board overseeing it? All the other regulators do.

JUDY WOODRUFF: Sen. Brown — well, let me interrupt you there and ask.

Sen. Brown, is that accurate, from your perspective, that this would be the first bureau, agency of its kind without any board oversight and no one to answer?

SEN. SHERROD BROWN: No. No, most of these regulatory bodies don’t have five-people or seven-people commissions. Some of them do; some of them don’t. So it’s far from unprecedented.

And the — to say he has dictatorial powers, the president of United States appoints a secretary of state, a secretary of the treasury, secretary of commerce. Do they all have dictatorial powers? No, they answer to the president of the United States.

If this Consumer Protection Bureau chief oversteps his bounds and the public’s really unhappy or even the banks think they’re being treated unfairly, they appeal to the president of the United States. And my guess is, if Rich Cordray did any of those things that they prospectively accuse him of, that he would be forced out by the president.

So we trust — we elect the president of the United States. The election wasn’t contested. He clearly, decisively won in 2008. He ought to be able to put in this director or another director or a federal judge that used to be just a matter of course here. But now it’s 60 votes for everything.

And we just — as Kay said, we — all we want is an up-or-down vote. Just don’t filibuster it. Let a majority of the Senate decide if Richard Cordray, who everybody says is qualified in both sides of the — both sides of the aisle, let him have an up-or-down vote. If he doesn’t get 51, that’s our problem and his problem and the president’s problem. But don’t make — don’t do a filibuster on this.

SEN. KAY BAILEY HUTCHISON: You know, Richard is — he’s raising this to the level of a new cabinet agency.

And we don’t need a new cabinet agency for consumer protection. That is already in the Office of the Comptroller, the SEC, the FDIC, the savings and loan regulators, the credit union regulators. We have got consumer regulators. We don’t need another cabinet agency that answers to no one.

JUDY WOODRUFF: And we are going to have to leave it there.

We have heard you both loud and clear, Sen. Kay Bailey Hutchison, Sen. Sherrod Brown.

SEN. SHERROD BROWN: Thanks.

SEN. KAY BAILEY HUTCHISON: Thank you, Judy.