Congress has imposed numerous checks and balances on the Consumer Financial Protection Bureau's powers, according to Richard Cordray, who has been nominated by President Obama to be the agency's first director.
Cordray told the Senate Banking Committee Tuesday afternoon that the Financial Stability Oversight Board can even veto and override the bureau's rules.
But the former Ohio attorney general said such a veto would "never be necessary." If banking regulators on the oversight board raise concerns that a CFPB rule would threaten the safety and soundness of the banking system, "We should work toward a consensus," he testified.
The nominee currently serves as the chief of CFPB's enforcement division.
Cordray also said the bureau is bound by a recent federal court ruling that requires regulators to conduct a cost-benefit analysis as part of the rulemaking process.
The bureau "must do a careful cost-benefit assessment of any rule and not simply reach a conclusion and rationalize it after the fact," he said.
But Cordray's testimony did not sway Sen. Richard Shelby, R-Ala., who claims the CFPB needs structural reforms to make it more accountable to Congress and independent of the executive branch.
"All of the bureau's power is concentrated in the hands of its director," the Alabama senator said. "It is staggering the amount of control the director will exert over the daily financial choices available to Americans." (See related story on the NMN website.)
