Forty-three Republicans in the U.S. Senate recently sent a letter to President Obama pledging to block the confirmation of Richard Cordray to head the Consumer Financial Protection Bureau. They want to see changes in the structure of the agency, arguing that “far too much power is vested in the sole CFPB director without any meaningful checks and balances.”
Notably absent from the signers was Rob Portman. The Ohio senator shares the concerns of his colleagues. He sent his own letter to Cordray, urging changes in the agency yet inviting his fellow Ohioan to work toward a compromise, or “some basic accountability reforms.” Portman has offered himself as a possible mediator between the White House and Senate Republicans.
The agency deserves stability and direction at the top. Cordray has served well the past year, in the aftermath of a controversial recess appointment. A federal appeals court put the appointment in jeopardy last month when it struck down recess appointments to the National Labor Relations Board. The president renominated Cordray. Ideally, the Senate would move quickly to confirmation, respecting the legislative process that created the bureau and the solid job Cordray has done.
That said, is there room for a deal? Does the bureau lack “meaningful checks and balances”?
For starters, Portman and others want the single director model replaced with a bipartisan commission. They also want funding for the bureau placed under the usual congressional appropriations process. In his letter, Portman returned to exaggerated concerns, citing “vast power to limit consumer choices” and a level of authority that “would be troubling in any hands.”
Actually, the bureau functions as the name suggests — to protect consumers. Already, Cordray has led the way in delivering improvements, making credit card contracts more transparent and readable. His office issued rules to deter deception and other misdeeds in mortgage lending, addressing problems at the core of the financial collapse. The bureau refunded $425 million to consumers who were victims of abusive practices.
All of this has been pursued to strengthen the position of consumers in the marketplace. For too long, they have been overmatched and vulnerable to unscrupulous operators. More, Cordray has received high marks for being appropriately tough, open and fair.
Congress removed the bureau from the usual funding process to ensure independence, its money coming as a percentage of the Federal Reserve Board budget. That is worth preserving, seeking to relieve the bureau from the pressures of the partisan moment, lawmakers inspired by persuasive flanks of lobbyists from the financial industry.
Don’t think the bureau escapes accountability. Consider that, among other things, it must consult with other financial regulators in writing rules, balance the cost and benefits to industry and consumers, and review potential actions with affected small businesses. A Financial Oversight Stability Board watches its work. The bureau falls under the inspector general of the Federal Reserve. It faces audits by the Government Accountability Office and the comptroller general.
The director must report twice a year to Congress, the opportunity ripe for lawmakers who think the office has gone too far in some way. The bureau is limited to a share of Fed money. To increase the amount, Congress must approve.
The purpose in having a single director in charge is clarity in accountability and swiftness of action. It has been applied elsewhere, at the Office of the Comptroller of the Currency, for instance. Yet here may be one area open for compromise, a bipartisan commission with the virtue of providing degrees of sustained focus and continuity, the director serving as the chairman.
Would that satisfy Portman and his fellow Republicans? It should be enough to win Richard Cordray confirmation and allow the bureau to proceed with its valuable work.