Two days after Barack Obama rolled out the populist message advisers hope will carry the president to a second term in the White House, he lambasted congressional Republicans for blocking his nominee to lead the Consumer Financial Protection Bureau, the watchdog agency that was established by last year’s financial reform bill.
The reaction from a clearly exasperated president — he said that the Republican filibuster of former Ohio Attorney General Richard Cordray’s nomination “makes absolutely no sense” — signaled that he won’t pull back from this fight the way he has on his appointees for both the judicial and executive branch, a pattern that hit a new low earlier this year when a Nobel Prize-winning economist was forced to withdraw his candidacy for the Federal Reserve board after Republicans in the Senate decided he was not appropriately qualified for the job.
“I just want to send a message to the Senate,” he said. “We are not giving up on this. We’re going to keep on going at it. We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers being protected [from] unscrupulous financial operators. And we’re going to keep on pushing on this issue.”
The Senate voted to confirm Cordray 53 – 46, but the Republican reflexive use of the filibuster to hold up voting means that they only need 40 votes.
Many on the left are skeptical that the Dodd-Frank law (so named after its lead Senate and House sponsors), which claims to prevent “too big to fail” financial institutions from wrecking the economy as they did a few years ago, goes far enough in limiting the size, power, and exposure of financial institutions. But advocates from across the progressive movement, including those well-versed in the nuances of the finnacial industry, express cautious optimism that if nothing else, the new agency — which was the brainchild of current Massachusetts Senate candidate and Harvard law professor Elizabeth Warren — will probably limit or even halt some of the most egregious abusive and predatory lending practices that ruin the livelihood of many Americans each year.
“Three years after the financial crisis plunged our economy into recession, we can’t afford to place the country at risk of another economic meltdown by undermining the agency before it begins its work,” said New York Attorney General Eric Schneiderman. “As a watchdog holding financial institutions accountable for wrongdoing, the CFPB will play a critically important role in developing a regulatory framework that ensures consumers are protected, financial institutions play by one set of rules, and our economy is not vulnerable to another preventable crisis.”
Schneiderman’s support is telling, since he’s among the “rogue” AGs unwilling to accept the legal settlement supported by the White House that would extract about $20 billion from banks in exchange for some immunity against future lawsuits.
“Today’s vote is extremely disappointing,” agreed Marge Baker of People For the American Way. “Senate Republicans are blocking a perfectly qualified and moderate nominee simply because they don’t want the Consumer Financial Protection Bureau to do its job. The CFPB was created to ensure that American consumers have a strong advocate in the financial sector, which has too often viewed the life savings of millions as the means to huge profits for a few.”
Progressive Democrats in Congress, though they might have liked to see more done to rein in the banking industry like putting hard caps on the size of banks, remain confident the agency will be a vital resource for the public.
“The CFPB seeks to empower American consumers to make the best financial decisions for their families — and that can only help out our nation as a whole,” said Senator Al Franken, a Democrat from Minnesota. “Rich Cordray has been on the front lines, protecting homeowners from risky — and sometimes illegal — practices of mortgage servicers. In 2009, he was the first state attorney general to take on a mortgage servicer for violating consumer laws.”
Even the Occupy Wall Street movement, which sees the modern American government as an ineffectual tool of monied interests, has a certain degree of optimism for the new agency, though they are reluctant to admit it.
“I think it would be the general feeling of the movement that the CFPB is very much a watered-down, toothless version of what it was intended to be,” said Ed Needham, a member of the Public Relations working group at Occupy Wall Street. “But it does matter. The GOP fights tooth-and-nail against anything that would suggest any type of regulation in corporate America, particularly within the financial industry.”
That ‘Occupy’ is straddling the line between rejection of a broken system and a tangible opportunity to improve lives is indicative of the strong political ground on which the president finds himself. This may be his best opportunity to rally the left behind a single banner in months — or even years.
“It’s certainly a valuable topic to talk about,” Needham added. “I think it’s a wonderful example for the challenges that we face in our democracy right now. Mr. Cordray is uniquely qualified to lead this [agency].
The new body has already taken over responsibilities from the Federal Reserve, the Federal Trade Commission, and other government agencies — but also has new powers to look out out for consumers. Powers that can only be put to work by a confirmed director.
“The CFPB was created by Congress — debated, passed, signed in to law by the President — in the wake of the financial crisis because the system of financial regulation we had before failed,” said Lisa Donner, Executive Director of Americans for Financial Reform, a coalition of hundreds of local and national groups backing the Dodd-Frank law. “It failed — among other things — to stop clearly fraudulent and obviously unsustainable mortgage lending that devastated our communities and our economy. All involved agree that Rich Cordray is well qualified and highly suitable to lead the CFPB, a job that is so important to our economic security.”
How the White House will mount pressure on Senate Republicans to give way and confirm a CFPB nominee supported by many Republican attorneys general — including some of those suing to overturn the president’s healthcare law — remains to be seen.