WASHINGTON — As expected, Senate Republicans on Thursday blocked a confirmation vote on President Barack Obama's choice to lead the new Consumer Financial Protection Bureau.
The continued GOP filibuster against former Ohio Attorney General Richard Cordray comes after a week of political pressure from the Obama administration for a straight up-or-down vote on Cordray's fate. The Senate voted 53-45 to proceed with a confirmation vote, but that was seven votes shy of the 60 votes needed under Senate rules to break the GOP filibuster.
The defeat continues the tit-for-tat partisan fighting that has characterized every development of the new consumer protection bureau, which is the most tangible government response to the nation's 2008 economic meltdown.
In a press conference after the vote, Obama appeared to leave the door open for a possible recess appointment for Cordray when lawmakers leave for the holidays.
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"We are not giving up on this," he said. "We are 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."
The president also voiced frustration over GOP efforts to delay his many other nominations, including federal judges and assistant treasury secretaries. He said Republicans are using delays as leverage to try to "reverse some sort of law that's already been passed."
"And that's part of what gets the American people so frustrated, because they don't feel like this thing is on the level," Obama said.
Created by the Dodd-Frank financial overhaul law in 2010, the Consumer Financial Protection Bureau serves as America's beat cop against deceptive, abusive and predatory loan products in the financial marketplace.
A division of the Federal Reserve, the bureau works as a standalone agency to make sure consumers understand the terms of loan products by cutting fine print, simplifying forms and helping to illuminate costly penalties and fees that often are hidden.
Republicans see the bureau as a vast overreach of government authority that lacks the transparency and accountability of other financial regulators. Forty-four Republican senators vowed in May to block any nominee for director until the agency's structure is revamped.
As a result, the agency has been without a chairman since assuming regulatory authority in July. Under the Dodd-Frank law, while the bureau can examine and oversee large banks, it won't be able to oversee non-depository institutions like mortgage companies, payday lenders and credit bureaus until the Senate confirms a director.
Republicans want the bureau's funding to go through the congressional budget process, unlike other banking regulators, rather than come from the independent Fed. Consumer advocates say that would allow the banking industry to pressure Congress to cut the bureau's funding.
Republicans also want a board to run the bureau instead of an individual director.
"I think that's a critical check on the bureau's authority to have a board that can discuss and come up with a consensus," said Sen. David Vitter, R-La.
But in its current structure, if a bureau action is perceived to threaten the safety and soundness of the financial system, a new panel — the Financial Stability Oversight Council — can veto agency rules with a two-thirds vote. The oversight council includes the heads of nine federal regulatory agencies, with the treasury secretary serving as chairman.
Sen. Sherrod Brown, D-Ohio, said Republicans keep "moving the goalposts" in their calls for changes in the new agency. He said that Democrats already have agreed to GOP requests to make the bureau a division of the Treasury Department and to require annual audits by the Government Accountability Office.
He said Republicans' continued opposition after each concession reflects their affinity for the financial industry.
Treasury Secretary Tim Geithner said Americans deserve the full protections envisioned under Dodd-Frank.
"The longer the Senate fails to confirm Richard Cordray to lead the Consumer Financial Protection Bureau, the longer they will be denied that protection," he said.
Raj Date, special adviser to the secretary of treasury at the bureau, said non-bank companies provided many of the risky loan products that sparked the financial crisis.
"Markets work best when there's an even playing field. And it is a real shame that we aren't yet able to level the playing field between banks and non-banks. As a result, consumers get hurt; banks get hurt; the market gets hurt," Date said.
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