President Obama's pick to head the Consumer Financial Protection Bureau (CFPB), former Ohio State Attorney General Richard Cordray, faced his first confirmation hearing Tuesday in front of the Senate Banking Committee.
But the hearing confirmed only one thing: "The political stalemate surrounding the new agency is likely to continue indefinitely," according to Chris Maag, reporter for Credit.com.
Nearly two months after opening for business, the consumer watchdog still does not have an official, Senate-confirmed, director to lead it and Senate Republicans have outright vowed to block any nominee until the agency undergoes major restructuring. The biggest complaint from the right is that the current state of the bureau gives too much power to the one person in charge.
"The director will single-handedly determine the financial products that consumers can buy, as well as which consumers have access to credit and which do not," said Sen. Richard Shelby (R-AL), ranking Republican on the Senate Banking Committee, at the hearing. "There is no meaningful check on the director's authority."
Republican claims are "quite overstated," says Maag in the accompanying interview with The Daily Ticker's Henry Blodget and Daniel Gross.
Maag points to the lot of checks and balances already in place that Senator Sherrod Brown (D-OH) outlined during Tuesday's hearing, including reviews by the House, Senate, the Government Accountability Office and the judicial system.
"This agency can do a lot of good for consumers [because] a lot of the problems of what we got into here with this ongoing, seemingly never-ending recession have a lot to do with predatory mortgages, with unregulated credit cards, with people making credit decisions thinking they have all the information, but they don't," says Maag.
But without a formal director, the consumer agency is void of some of its broader and arguably very important mandates. It doesn't have the power to regulate smaller and non-bank financial institutions like payday lenders and student lenders, who have been among the most predatory in recent years.
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- Ohio State Attorney General Richard Cordray