Why does GOP want to KO the CFPB?


  President Obama riled Republicans this past Wednesday with his “recess” appointments of four long-blocked agency nominations. The most hair raising for the GOP was the President’s appointment of Richard Cordray to the Consumer Financial Protection Bureau, an agency congressional Republicans have opposed since its inception. The President’s actions drew further anger due to questions as to whether the Senate was technically in recess. Were these appointments a response to consistent blockage of the confirmation process? What is behind the ardent GOP opposition to the CFPB and other agency appointees?

Before addressing these questions, it is important to understand what the Consumer Financial Protection Bureau’s (CFPB) mission is. The bureau was created as part of the Dodd-Frank financial reform in July 2010 in response to reported claims of misleading and deceptive practices by banks, mortgage companies and credit card companies. These issues, of course, gain prominence under the spotlight of the mortgage meltdown. The agency’s primary goal is to ensure contractual language and documents from banks, credit card companies, mortgage brokers, payday lenders, student loan providers and other financial institutions are understandable to average consumers. It seeks to educate consumers so people can make financial decisions based on sound comparison and assessment of all available information. Essentially, the CFPB’s mission is to ensure consumers are thoroughly informed before entering into financial contracts and agreements.

Sounds like commonsense. Where would opposition to an agency tasked with enforcing transparency in financial industry-consumer interactions be based?

Congressional Republicans take issue with how the agency is structured and how it is funded. As it was created, the CFPB is isolated within the Fed with it’s director appointed by the president and confirmed by the Senate. The GOP wants the bureau’s leadership restructured into a bipartisan executive board to ensure one person does not wield too much power. Additionally, they want direct funding authority placed under congressional discretion. In its current form, the bureau is funded through the Fed’s budget. These are not unreasonable requests. But they do, however, remove the barriers against the political winds of Washington the agency currently has built around it. And allowing those changing political directions to influence the CFPB’s will only serve to nullify its’ mission to create a fair and competitive, financial playing field.

Throughout 2011 public perception of Congress has deteriorated with congressional Republicans leading the dive to the bottom. On top of this their unified efforts to not raise taxes on the wealthy -despite public feelings to the contrary-, their opposition to the President’s Jobs Bill, their fights against the payroll tax cuts and extension of unemployment benefits, the Republican Party is increasingly seen as the party that favors the wealthy at the expense of the much larger middle and poor classes. Continued opposition to an agency designed to benefit average, American consumers will only solidify those perceptions.

Due to the constant blockage of the CFPB director’s confirmation – ongoing since May 2011 – , President Obama jumped at a short recess of the Senate and appointed Cordray and three National Labor Relations Board appointees. Traditionally, the president waits at least 3 days into a senate recess to make such decisions but to continue their blockade of the President, the Republicans kept Congress in pro forma sessions every 3 days to prevent such appointments. These sessions are essentially gatherings of the Senate as a simple formality. The session before Obama’s announced appointments lasted under a minute with no work performed.

The 3-day rule is a precedent set during the Clinton administration and in breaking it Obama angered many Republican legislators. Mitch McConnell stated, “arrogantly circumvented the American people.”  He went on to say, “This was surely not what the framers had in mind when they required the president to seek the advice and consent of the Senate in making appointments.

This is a valid postulation. Did the President overstep his powers in this case? Perhaps. Now, since the topic has been raise one may wonder, while Mr. McConnell was speculating as to what the “framers” intended did he allow himself to ponder what they might think of his party’s record use of filibusters throughout Obama’s presidency. The Senate Minority Leader may be correct in his assessment of the framer’s intentions as they pertain to nominee confirmation. But in the same light did he consider the ire the GOP would draw if the founders witnessed current efforts to extort legislative change by withholding presidential appointees? How would the “framers” view this circumvention of the well-established legislative processes? And which offense would they consider the most serious transgression?

This debate leads to another question. What impact does this constant blockage of potential agency leadership have on essential functions of the government and by extension how does it impact other areas of society such as the court system and financial and economic sectors? Leaderless agencies are limited in their operating capacity. Judicial vacancies result in significant court case backlogs and increased caseloads for existing judges. These concerns were presented by Thomas E. Mann, senior fellow at the Brookings Instititute, during Senate Committee on Rules and Administration testimony. His prepared statements illustrated several high ranking positions for agencies from the Treasury Department (during the height of the economic crisis) to Commissioner of U.S. Customs and Border Protection to directors of the Transportation Security Administration, National Highway Traffic Safety Administration, and Centers for Medicare and Medicaid Services have experienced extended delays in Senate confirmations.  

In quoting the work of his colleague, Professor Cal Mackenzie, Mann went on to say,  “we have in Washington today a presidential appointment process that is a less efficient and less effective mechanism for staffing the senior levels of government than its counterparts in any other industrialized democracy.” And new work by UC Berkeley’s Professor Anne Joseph O’Connell found presidential appointee confirmations dropped from 80.1% under George W. Bush to 64.4% under the current administration by the end of their first year.

Currently, there are 202 nominees awaiting confirmation including 2 positions on Federal Reserve’s Board of Governors and Fannie Mae and Freddie Mac, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency are operating under unconfirmed “acting” directors. This begs the questions, how warranted is the political posturing over such economically pivotal agencies especially during this time of precarious recovery?  

While there are many valid reasons for minority parties to block confirmation of various presidential nominees or pieces of legislation the increased use of the filibuster to prevent confirmation votes illustrates how it has evolved from check against the senate majority to a default tool to further partisan or ideological agendas. In the case of Cordray’s confirmation, senate GOP attempted to force changes in legislation they were unable to influence through traditional means. Republicans may be correct that Obama’s appointments were contrary to the original intent but in light of the current abuse of filibusters it is not difficult to imagine the framers deciding in favor of the President and putting the business of the people ahead of partisan politics.       

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4 Comments to “Why does GOP want to KO the CFPB?”

  1. “This was surely not what the framers had in mind when they required the president to seek the advice and consent of the Senate in making appointments.” Yeah, but they also didn’t define what constitutes a “recess” as it relates to Presidential appointment. So all they really can do is talk vaguely about intentions that can never be validated (or this would have been settled under Teddy).

    • No, it really didn’t. It is kind of vague. I’ve seen some scholars are calling this an “intra-session” appointment which is even more vague as far as its Constitutional definition goes.

      Viewing this overall situation from afar it seems there is a need for filibuster reform and something placed in there that requires substantive justification.

  2. When you wonder about why the segments of federal government have such low approval ratings you need to ask “Who benefits?” There is a political party which has as its goal the shrinking of federal government to a much smaller entity and what better basis for doing so than to claim a great deal of money is being spent but little gets done. The motive is to hobble the power the government has to temper the excesses of business. As a consequence, members of this party refer to the CFPB as “running rampant” and as a “rogue agency.” I, myself, would love to have a rogue governmental agency running rampant protecting citizens from financial misconduct.

    • It seems that’s all many hear when the CFPB is brought up among talking points. There needs to be more real information communicated as to what it actually does. It’s doubtful many average people would take issue with its mission once they know what it is.

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