In a long-awaited showdown over the future of the Consumer Financial Protection Bureau on Tuesday, Republicans and Democrats sparred over whether the Senate should proceed with the nomination of the bureau's first director.
GOP members of the Senate Banking Committee dug in their heels and reiterated their pledge to block the confirmation of any nominee until changes are made to the agency's structure.
But Chairman Tim Johnson dismissed those senators as a "vocal minority," accusing them of playing games with the confirmation process and holding the nomination of former Ohio attorney general Richard Cordray hostage.
"This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit unions at a competitive disadvantage to nonbank financial companies," Johnson said at Cordray's confirmation hearing.
But Sen. Richard Shelby, the committee's top Republican, insisted the hearing was premature. He said the committee shouldn't even consider a nominee until certain changes are made, including changing the CFPB's leadership from a single director to a five-member commission, subjecting it to the appropriations process and making it easier for a council of regulators to override the bureau's decisions.
Neither the White House nor the Democrats have made any attempt to meet those demands, which were outlined in a letter signed by 44 GOP senators earlier this year, Shelby said.
Without those reforms, he said, the director would have a staggering amount of control over Americans' financial choices, yet be virtually free of any constraints on his authority.
"No one person should have so much unfettered power over the American people," he said. "It blatantly violates the spirit of our democratic system of government."
Sen. David Vitter, R-La., also said he was unwilling to support any nominee until Congress implements "proper checks and balances."
"This is a constitutional, checks and balances issue, not a partisan issue," Vitter said. "There's a real danger of the CFPB being a super bureaucracy that does a lot of damage to the economy by overreaching in its attempts to make decisions for consumers."
Shelby said he has no qualms with Cordray, and thanked him for meeting privately with him and Sen. Bob Corker, R-Tenn., before the hearing.
"You're caught between a big substantive debate here, as you well know, and that's going to have to be resolved before we move this nomination further," Shelby said.
Johnson, however, said Republicans are rehashing a debate that was settled last year when Congress created the CFPB under the Dodd-Frank Act.
"The misleading claim of no CFPB accountability —drummed up by special interests and put forth by a vocal minority — should be expressed for what it is: an attempt to destroy the bureau's ability to do its job of protecting American consumers," Johnson said.
He was joined by Sen. Jack Reed, D-R.I., who dismissed the Republicans' strategy.
"This notion of 'Let's wait till we get it perfect until we appoint somebody' would have delayed, I think, the election of George Washington for many decades," Reed said.
Cordray, who currently serves as the CFPB's enforcement director, attempted to address Republican criticism that the bureau isn't accountable to Congress.
If he is confirmed as director, Cordray said, "I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress and I will be eager to hear your thoughts about how we should do our work."
