No chief for the consumer bureau any time soon

@CNNMoney September 6, 2011: 5:35 PM ET

WASHINGTON (CNNMoney) -- President Obama's nominee to run the Consumer Financial Protection Bureau got a hearing on Tuesday, but that may be all he gets.

Democrats want Richard Cordray to be the consumer bureau's first director. Republicans say they haven't changed their mind -- they won't confirm any director to run the bureau without significant changes to the bureau's structure, which would weaken the bureau's powers.

During the Tuesday hearing, the ranking Republican on the Senate Banking panel, Sen. Richard Shelby, called the hearing "premature," saying that the panel shouldn't be considering any nominee until Democrats take their demands for accountability more seriously.

Republicans want the director replaced with a panel and they want to make it easier to veto consumer bureau rules.

"You're caught between a big substantive debate here, as you well know," Shelby said to Cordray.

Cordray, 52, works as the chief enforcement officer for the Consumer Financial Protection Bureau (CFPB) in Washington. He's an attorney who served in the Ohio state house and teaches at Ohio State University as an adjunct professor.

Democrats used the Senate banking hearing to complain that Republicans were using filibuster powers to hamstring the bureau and rehash a battle fought last year.

"This vocal minority insists on rehashing the same debate Congress had last year when it created the CFPB as an accountable yet independent regulator," said Senate Banking chief Tim Johnson.

Sen. Bob Corker, a Tennessee Republican, said that his big opposition is that there's no way to challenge a decision by the consumer bureau, unless a particular rule "threatens the stability of the financial system."

The consumer bureau can be over-turned by two-thirds vote of a panel of financial regulators, which Corker called a "high hurdle."

Corker asked Cordray if he thought that veto power over the bureau's decisions was a high hurdle.

"It is a high hurdle, but not an inappropriate one," Cordray said.

Behind the Bureau: In July, the CFPB launched as an independent agency, got the power to start examining the books of the nation's largest banks to make sure they're abiding by existing laws that protect consumers.

The bureau can also make sure that the banks are following credit card laws that crack down on fees, and spell out how long it takes to pay off credit card debt through minimum payments.

However, until Cordray steps up as the official director, the bureau continues to lack new powers critical to preventing the next financial crisis --- such as regulating the non-banking firms that originated hundreds of millions of dollars in subprime mortgages, in the height of the boom, to families who couldn't afford them,

During the hearing, Cordray acknowledged that lack of power as "unfortunate," especially for smaller banks who compete with nonbanks.

The CFPB was the brainchild of Elizabeth Warren, a Harvard University law professor. The bureau is intended to make basic financial practices -- such as taking out a mortgage or making loans -- more clear and transparent, while ferreting out unfair lending practices.

Warren had been a leading candidate to run the bureau and spent the past year working as a White House and Treasury adviser setting up the bureau. She has returned to Harvard University. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.45%4.56%
15 yr fixed3.89%3.98%
5/1 ARM4.22%4.40%
30 yr refi4.46%4.55%
15 yr refi3.87%3.96%
Rate data provided
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->