(Updates with Obama comments starting in eighth paragraph.)
Oct. 6 (Bloomberg) -- Richard Cordray’s selection to lead the U.S. Consumer Financial Protection Bureau was approved by the Senate Banking Committee in a move that sets up a showdown with Republicans vowing to block any nominee for the post.
Today’s 12-10 vote sends the nomination to the full Senate, where 44 Republicans have pledged to deny confirmation for anyone to serve as director until changes are made in the structure and funding of the new agency created by the Dodd- Frank Act. That opposition would block confirmation by the 100- member Senate, which would require at least 60 votes.
“My colleagues and I stand by our pledge that no nominee to head the CFPB will be confirmed by the U.S. Senate -- regardless of party affiliation -- without basic changes to the Bureau’s structure,” Senator Jerry Moran, a Kansas Republican, said in a statement today.
Cordray, the former Ohio attorney general now serving as the consumer bureau’s enforcement chief, was nominated by President Barack Obama in July. Republican lawmakers are seeking changes including replacing the director position with a five- member board and making the bureau’s budget subject to the congressional appropriations process.
If the Senate fails to confirm a consumer bureau director, it will “leave a vast array of non-bank financial institutions, consumer finance companies, outside the scope of consumer financial protection, which was exactly the same mistake that left us vulnerable to the financial crisis that we went through,” Treasury Secretary Timothy F. Geithner told the Senate panel in a hearing after the vote on Cordray.
The consumer bureau, which officially began work on July 21, won’t assume full supervisory powers over non-bank financial firms until a director is in place.
Republicans “want to roll back the whole notion of having a consumer watchdog,” Obama said today at a news conference. “I’m going to be fighting every inch of the way here in Washington to make sure that we have a consumer watchdog,” he said.
Obama tied the need for a strong consumer agency to the recent decision by Bank of America Corp. to impose a $5 monthly fee on some customers for debit-card use. The fee came shortly after rules took effect limiting the “swipe” fees banks can charge retailers when customers use debit cards.
“People have been using financial regulation as an excuse to charge consumers more,” Obama said.
The president said that while the bureau’s role is not to dictate profitability it is “entirely appropriate for the government to have some oversight role” on behalf of consumers.
“My main goal is to make sure that we’ve got a consumer watchdog in place who is letting consumers know what fair practices are, making sure that transactions are transparent, and making sure that banks have to compete for customers based on the quality of their service and good prices,” Obama said.
--Editors: Lawrence Roberts, Maura Reynolds
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