[Congressional Record Volume 157, Number 188 (Thursday, December 8, 2011)]
[Senate]
[Pages S8422-S8429]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXECUTIVE SESSION
______
NOMINATION OF RICHARD CORDRAY TO BE DIRECTOR, BUREAU OF CONSUMER
FINANCIAL PROTECTION
The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will proceed to executive session to consider the following
nomination, which the clerk will report.
The assistant legislative clerk read the nomination of Richard
Cordray, of Ohio, to be Director, Bureau of Consumer Financial
Protection.
The ACTING PRESIDENT pro tempore. Under the previous order, the time
until 10:30 a.m. will be equally divided and controlled between the two
leaders or their designees.
Mr. REID. I ask that a quorum be called and the time be equally
divided between the two sides.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask that the order for the quorum
call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Recognition of the Minority Leader
The ACTING PRESIDENT pro tempore. The Republican leader is
recognized.
Mr. McCONNELL. This morning the Senate will vote whether the new
Consumer Financial Protection Bureau should be able to put a director
in place before concerns about its accountability to the American
people are addressed. Let me stress that is all today's vote is about.
Today's vote is about accountability and transparency. It is a debate
about whether we think Americans need more oversight over Washington or
less.
Republicans made our position clear more than 7 months ago when 44 of
us signed a letter saying we will not support a nominee for this
Bureau, no matter who the President is, until three commonsense
conditions are met that would bring some transparency and
accountability to the CFPB. That letter now has 45 signatories.
The President knew about these concerns months ago and he chose to
dismiss them. Now he is suddenly making a push to confirm his nominee
because it fits into some picture he wants to paint about who the good
guys are and who the bad guys are here in Washington. So, once again,
Democrats are using the Senate floor this week to stage a little
political theater. They are setting up a vote they know will fail so
they can act shocked about it later. This is what passes for leadership
at the White House right now.
The President has made his choice about how to deal with this issue,
and we have made ours. What we have said is that until this or any
other President addresses these legitimate concerns, we cannot and will
not support a nominee. Here is what we said in that letter 7 months
ago: First, replace the single Director with a board of directors who
would oversee the Bureau. Second, subject the Bureau to the
congressional appropriations process. Third, allow other financial
regulators to provide a check on CFPB rules so they don't imperil the
health of financial institutions and lead to unnecessary bank failures.
Look, everybody supports strong and effective oversight, but that has
to include the overseers as well. Unelected bureaucrats must be held
accountable to the American people, and that is exactly what our
proposal would do. So it is up to the President. Republicans have
outlined our concerns and they are well known. We are not going to let
the President put another unelected czar in place, unaccountable to the
American people. And, frankly, his refusal to work with us only deepens
our concerns. The CFPB requires reforms before any nominee can be
confirmed. It is time the President takes these concerns seriously.
I look forward to hearing from the President on this issue so we can
put in place the kind of oversight and accountability the American
people expect in an agency of this size and this scope. Until then, I
will vote against this nominee for the CFPB and any others that this or
any other President sends until he works to fix the problems, until he
brings transparency to this bureaucracy and accountability to the
American people.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SHELBY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. SHELBY. Mr. President, I rise today in opposition to the motion
to invoke cloture on the nomination of Richard Cordray to be the
Director of the Bureau of Consumer Financial Protection.
Earlier this year, I and 44 of my colleagues sent a letter to the
President expressing our concerns with the unaccountable structure of
the Bureau. It is now 7 months later and the President has yet to
respond.
The majority has called for a vote they know will fail today. It is
evident the White House and the majority have decided to place politics
ahead of good policy. They have chosen to fabricate a political issue
rather than do what is in the best interests of consumers. Nonetheless,
they claim this debate is about consumer protection.
There is no disagreement, however, that consumer protection, as the
Acting President pro tempore knows, needs to be enhanced. The only real
point of contention is whether the new Bureau of Consumer Financial
Protection will be accountable to the American people.
If we believe regulators never fail, then the current structure of
the Bureau is just fine. Yet we all know regulators do fail and their
failures harm consumers.
Members of the majority, I believe, have repeatedly made this point
with their criticism of the Fed's failure to regulate subprime
mortgages and the OCC's preemption of State consumer protection laws.
I strongly agree with the majority that our regulators failed to do
their jobs in the lead-up to the financial crisis. But the lesson we
should learn from the financial crisis is not that we need more
unaccountable regulators. Instead, all of our financial regulators need
to be held more accountable.
Just as banks should be held accountable for their failures,
regulators should also be held accountable for theirs. After all, if
regulators know Congress can hold them accountable, they will have a
far stronger incentive to do their jobs. That will be good, as we all
know, for consumers. That is why, if the Bureau is reformed, the
biggest winners will be the American consumers.
Today, however, the majority will show that they are now more
concerned with insulating bureaucrats from accountability and rewarding
political allies than looking out for consumers. The administration and
the majority will try to argue that the Bureau already is accountable.
Indeed, they will say it is more accountable than any other financial
regulator. But let's look at the facts. The facts tell a different
story.
First, it is necessary to appreciate the amount of power placed in
the hands of the Director of this Bureau. No bureaucrat will have more
power over the daily economic lives of Americans than this Director.
The Director, in effect, will decide which Americans can access credit
to buy homes, purchase cars, and pay for college. The Director will
regulate not only financial companies but also tens of thousands of
Main Street businesses. Also, the Director will unilaterally decide how
the Bureau spends its up to $600 million budget.
Despite the vast power vested in the hands of the Director, there are
no effective checks on the Director's authority. To truly understand
just how unusual the structure of the Bureau is, one need only compare
it to other independent agencies.
Unlike the Chairman of the SEC, the CFTC, and the Federal Reserve,
the Director of the Bureau does not have to obtain the agreement of
other board members or other government officials before acting. Unlike
other consumer protection agencies, the Bureau is not subject to the
congressional appropriations process. Indeed, other consumer
[[Page S8423]]
protection agencies, such as the Federal Trade Commission and the
Securities and Exchange Commission, are both subject to appropriations
and are governed by five-member boards.
To further ensure against one party domination, the FTC and the SEC
can have no more than three members from the same political party.
Another important comparison is with the Consumer Product Safety
Commission. This agency actually served as the template for Professor
Warren when she first advocated for the creation of a consumer
protection agency in an article several years ago. How is the Consumer
Product Safety Commission structured? It is, first, funded through
appropriations, and there is a five-member commission.
Opponents of accountability have sought to justify the structure of
this Bureau by pointing to the Office of the Comptroller of the
Currency and the Federal Housing Finance Agency. Once again, the facts
refute their argument.
First, the Comptroller can be removed at any time by the President
for any reason. In contrast, the President can remove the Director of
the Bureau only for limited grounds of ``inefficiency, neglect of duty
or malfeasance.'' This means the Director of the Bureau cannot be
removed even if the Director pursues policies that are harmful to the
American people. How is that good for consumers?
As for the Federal Housing Finance Agency, its Director is far less
powerful than the Director of the Bureau. The Director of the Federal
Housing Finance Agency oversees the regulation of only 14 financial
institutions. He does not have sweeping powers over all consumers and
tens of thousands of Main Street businesses like the Director of the
Bureau would have.
It should be common sense that the more power an agency has, the more
accountable it needs to be. Moreover, rather than attempting to point
to other regulators to justify the structure of the Bureau, a more
responsible approach would be to make all of our financial regulators
more accountable. And we should begin right here with the Bureau.
To make the Bureau more accountable, we have proposed three
commonsense reforms.
First, the Bureau should be led by a board of directors, as I have
said. This is such a commonsense measure that the President and the
Democratic-controlled House originally called for the consumer agency
to be structured as a commission.
Second, the Bureau's funding should be subject to congressional
appropriations.
Currently, the Federal Reserve is required to transfer up to $600
million to the Bureau each year. These are funds that could otherwise
be remitted to the Treasury and used for deficit reduction or other
things. Diverting this money to fund an unaccountable Federal agency
sets a dangerous precedent of using the Federal Reserve as an off-
budget mechanism for funding programs. It had not happened before.
In addition, funding the Bureau through the Fed removes any check on
runaway spending. I believe the fiscally responsible way to fund the
Bureau is through the congressional appropriations process just as
every other consumer protection agency is funded.
Our third reform proposal is to create an effective safety and
soundness check for the prudential bank regulators.
Some have said the Bureau already has a check under the so-called
Financial Stability Oversight Council veto. But this veto was designed
so it would never actually constrain the Bureau. The council can only
overturn a rule in an extremely rare case: The rule must put at risk
the safety and soundness of the entire U.S. banking system or the
stability of the U.S. financial system.
Under this construct, a rule could cause the failure of multiple
banks, but the council still would not have standing to alter the rule.
Additionally, the procedure is rigged to prevent the council from
acting. It takes an affirmative vote of at least two-thirds of the
council's members to set aside one of the Bureau's rules, and the
Bureau's Director is a voting member of the council.
In addition, only 3 of the council's 10 members are actually bank
prudential regulators. This veto is not a check on the powers of the
Bureau. It is a sham that they have today. We need to change that.
Recent history shows that taxpayers are ultimately on the hook for
bank failures. For this reason, consumer protection needs to be
carefully coordinated with bank regulation to prevent against
unnecessary bank failures.
As presently structured, the Bureau can ignore any advice offered by
banking regulators, even if it undermines the safety and soundness of
banks. Unless this structural flaw is remedied, a real possibility
exists that the consumer bureau will one day cause bank failures that
end up harming consumers, taxpayers, and our economy.
In light of the reasonableness of the reform proposals we have
requested, the question remains: Why are the administration and the
majority so insistent that the Bureau be unaccountable?
Clearly, they want to use the Bureau as a political issue. A second
reason is that they believe nonbank financial institutions are not
currently regulated. But this is false. The Federal Trade Commission,
the State attorneys general, and State financial regulators all have
authority over nonbanks. A more likely reason for today's vote is that
the Bureau will provide funding to key liberal activists, such as
ACORN.
Other agencies must return to the Treasury funds what they receive
from enforcement actions. This consumer bureau, as now structured, is
allowed to dole out money it collects from fines and penalties to
liberal consumer groups. This reveals why the administration and the
majority want so desperately for the Bureau to be unaccountable. They
want the Bureau to be a permanent funding machine for their political
allies.
Finally, we are going to hear that our methods to achieve reform are
unprecedented in the history of the Senate. It has been said:
Never before has the consideration of a nominee been
conditioned on a change in the law.
This, of course, is ridiculous on its face. It is nonsense. Nominees
are held routinely in the Senate by both parties, for any number of
reasons, including the desire to make changes in existing law. The only
thing different in this particular case is that it is completely
transparent. No secret backroom deals. We are right here in the open.
After all the harm caused to consumers by financial regulators, it is
time the majority stops using consumer protection as a political
football and starts taking actions that actually help consumers. We can
take the first step by reforming the Bureau to make it accountable to
the very consumers it purports to protect.
Until that time, however, we cannot, we should not, and we will not
move forward on the nomination of the Director to lead this massive and
unaccountable bureaucracy. I urge my Democratic colleagues to stop
obstructing reform and join with us to move forward on real consumer
protection.
I yield the floor.
The PRESIDING OFFICER (Mr. Udall of New Mexico). The Senator from
Rhode Island.
Mr. REED. Mr. President, I ask unanimous consent to be recognized for
5 minutes at the conclusion of Senator Johnson's remarks.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. JOHNSON of South Dakota. Mr. President, 2 months ago the Senate
Banking Committee voted along party lines to send to the full Senate
the nomination of Richard Cordray to be the first Director of the
Consumer Financial Protection Bureau. Due to an unprecedented and
irresponsible display of political gamesmanship, Mr. Cordray's
nomination and strong protections for American consumers are being held
hostage.
Before any candidate was put forth, Senate Republicans pledged to
block the nomination, and their objections have nothing to do with Mr.
Cordray's qualifications, his politics, or his character. Republican
Senators have actually admitted as much, with a public pledge to block
any nominee for the new consumer agency until a list of legislative
demands, which would greatly weaken the agency, are met. That those
demands were debated and rejected by a bipartisan Congress last year is
beside the point. The minority
[[Page S8424]]
party is distorting the Senate confirmation process, mandated by the
Constitution, to rewrite a law against the wishes of the American
people.
Why do Senate Republicans remain opposed to consumer protection
despite national surveys showing 3-in-4 bipartisan voters support the
new agency's creation? Whatever the motivation, it appears to outweigh
any concerns about protecting families buying homes, students borrowing
for college, and service members or older Americans falling prey to
financial scams.
This vocal minority opposed to strong consumer protection and helped
by special interests have drummed up misleading claims to hide behind.
They claim the CFPB Director will put the economy at risk--ignoring the
effects of the foreclosure crisis, which was itself fueled by
irresponsible and predatory lending. They claim the agency lacks
accountability--ignoring the fact that it is bound by accountability
measures comparable to or exceeding that of other independent financial
regulators. And they claim restrictions on abusive financial products
will hurt lenders--ignoring the damage those products inflicted on
consumers tricked into signing unfair contracts filled with hidden fees
and penalties.
In reality the CFPB was created as an accountable yet independent
regulator in bipartisan negotiations last year. Its mission is to
protect consumers--by cracking down on predatory lenders and
streamlining disclosures so families can make better informed financial
choices. But until it has a confirmed director in place, the CFPB's
authority over nonbank financial institutions, like private student
lenders and mortgage brokers, will be stifled. Every day Mr. Cordray's
confirmation is blocked, vital protections are delayed, millions of
Americans--including service members, veterans and older Americans--are
left vulnerable, and the Nation's community banks and credit unions
remain at a disadvantage to their less-regulated competitors.
The question we consider today should not be whether the minority
party can hijack this constitutional process and demand as ransom
legislative changes that would hamstring the consumer agency. The
question should be whether Mr. Cordray is qualified for the job. And I
believe that Mr. Cordray is an outstanding candidate. For years Richard
Cordray has worked tirelessly as a public servant. As Ohio's Attorney
General he aggressively pursued financial crimes by banks and mortgage
firms, and won more than $2 billion in settlements for the State. And
as Ohio's first solicitor, he argued cases before the Supreme Court to
protect consumers and enhance the quality of our financial markets.
American families paid a steep price for the financial crisis,
battered by layoffs and foreclosures. Yet incredibly, many of the bad
actors that contributed to the crisis remain poorly regulated and
continue to lobby against tougher regulation. Congress created the CFPB
to protect consumers and clean up the marketplace, but it needs a
director. Richard Cordray has proven himself capable for the job, and
there is no legitimate reason to block his confirmation.
I urge my colleagues to reconsider their political game playing and
do the right thing.
Stop blocking Richard Cordray's nomination and allow him to have an
up or down vote.
I yield to my colleague from Rhode Island.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. REED. Mr. President, I wish to thank the chairman for his
leadership on this important issue and so many others before the
Banking Committee.
Since September 2008, we have learned many hard lessons about the
factors that contributed to the financial crisis. To address systemic
risks and to fix the system, we passed the Dodd-Frank Wall Street
Reform and Consumer Protection Act. One of the most important reforms
we made in that legislation was the creation of the Consumer Financial
Protection Bureau, or the CFPB. The CFPB is charged with stopping
abusive mortgage originators, stopping abusive credit card companies,
and stopping abusive private student loan lenders.
For years we have had organizations whose purpose was to protect the
banking system and, indirectly, consumers. We need to provide a
balance. Frankly, if we had this balance in place prior to 2008, we
might have avoided some of the incredible costs we have seen not only
to consumers but to the entire banking system as a result of predatory
behavior by many different financial institutions.
Unfortunately, many of my Republican colleagues are trying not to
correct deficiencies in the Dodd-Frank act or improve it. They want to
gut it. One of the things they want to take out is consumer protection,
and they want to do that by denying a nominee to head up this important
agency.
It certainly is a prerogative of my colleagues to work on improving
any piece of legislation, but effectively to say: We will not let
legislation that has passed this body by 60 votes and that has ample
precedent in the law to take effect because we won't put a person in
charge is, I think, abusing the process.
We have worked on this issue, and we know consumers need these types
of protections. We know that daily there are scams targeting the
elderly. There are unscrupulous mortgage lenders and abusive payday
lenders. Most financial firms are not like this--in fact, these
individuals probably represent a very small minority of the financial
community, but they are abusive predators, particularly to the most
vulnerable people in our society.
There has been a lot of discussion about the 1 percent and the 99
percent. Well, guess what, the 99 percent are consumers, and the 1
percent are probably those people who are running some of these
financial institutions, some of them fairly and scrupulously, but
others who are not.
We want to protect consumers in this country--all of us--certainly
the 99 percent, but because of Republican opposition of this nominee,
we are running into a real problem. If we do not have a head of this
organization, then it cannot effectively implement regulations and
effectively enforce the laws it has been given the task to oversee and
implement.
We have to have rules that apply across the country that get at the
shadow banking system, that provide the kinds of protections consumers
can rely on, and that, in fact, improve the operation of the
marketplace. Again, I think some of the people who regret what happened
the most in the 2007, 2008, 2009 time period are financial leaders
looking around and saying: Why wasn't anyone checking the behavior of
some of the financial companies out there that have ruined my
marketplace and ruined my reputation? Well, we have to do that.
The longer Richard Cordray is blocked, the longer such disreputable
practices in the financial marketplace can continue. And Richard
Cordray is entirely qualified: as former treasurer of the State of
Ohio, he knows the financial business and worked closely with banks at
the Treasury, as former attorney general of Ohio, he worked to protect
consumers, and as an individual, he has the intellect and the character
to do an outstanding job. We have to get him in place.
Who suffers if we don't do this? Well, among those who are suffering
are military personnel. I had the privilege of commanding a paratrooper
company in the 82nd Airborne Division in the 1970s. I was an executive
officer, and I handled all the complaints, all the dunning, all the
letters that were coming in from my soldiers. It has gotten worse.
Holly Petraeus, who is the head of the Office of Servicemember
Affairs at the CFPB, testified before the committee. She talked about
Internet lenders who target military personnel--vulnerable soldiers and
their families--who are about to deploy or who just came back from
Afghanistan. They will give loans of up to 40 percent of a soldier's
pay. Of course, the interest rate can be as high as 584 percent APR. We
can't stop that until we get somebody such as Richard Cordray in charge
of this organization.
She also talked about the dunning calls, 20 times a day, threatening
them: We will go to your commander. We will have you court-martialed.
We will take away your security clearance. We will ruin your career.
We have to stop that. This is about real people, real consumers. We
have to confirm Richard Cordray.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from New Jersey.
[[Page S8425]]
Mr. MENENDEZ. Mr. President, I understand I have 5 minutes.
The PRESIDING OFFICER. There is no order. The Senator may use 5
minutes.
Mr. MENENDEZ. Thank you very much.
Let me first thank Chairman Johnson for his leadership in this regard
and in so many other major issues before the Banking Committee. He has
really exercised a lot of our oversight obligations in making sure we
implement Wall Street reform in a way that protects all of us as
taxpayers in the country but creates a system that can still let us
economically flourish, and this is one of those.
For too long too many in Washington protected Wall Street from
commonsense regulations and let consumers fend for themselves. For too
long Republican economic policy, when it should have protected the 99
percent of American consumers from the reckless financial games that
led us to the brink of economic disaster in 2008, protected the 1
percent on Wall Street instead.
Banks played Russian roulette with the future and economic security
of middle-class families, and no one--no one--was watching. Backed up
by too-big-to-fail government guarantees, they wreaked havoc on our
economy and on the jobs and retirement savings of families who played
by the rules.
We have lived through the unfortunate results of lax oversight, and
now it is time to work together to correct it. It is time to stop the
political games and govern. It is time to act. It is time to work
together to make sure middle-class families get the protection they
deserve and the watchdog they need.
This is really about whose side a person is on. Cordray and consumer
protection are being blocked simply because Republicans want to protect
Wall Street. Wall Street already has a legion of lobbyists protecting
its interests. We need someone who can protect Main Street's interests,
and that is what Richard Cordray would do as the Director of the
Consumer Financial Protection Bureau.
Richard Cordray is an unquestionably well-qualified nominee, and no
one is disputing that fact--no one. I have not heard anyone dispute his
qualifications for the job. We know the Consumer Financial Protection
Bureau would be off to a good start with Richard Cordray at the helm,
despite efforts by special interests to derail the process. It will be
a strong but fair agency under Richard Cordray--to protect financial
consumers who are tired of being tricked by the fine print, the
``gotcha'' paragraphs that no one but a bank lawyer would understand.
Despite hysterical claims from Wall Street, the Bureau actually won
widespread praise from both consumers and the industry for its first
major initiative when it created a new and greatly simplified Know
Before You Owe mortgage loan disclosure form so that consumers
understand what kind of mortgage they are getting into before they take
it. Had we had that type of language early on, maybe we wouldn't have
had part of the crisis in which consumers were led to bad mortgage
products--products that ultimately had skyrocketing interest rates--
when they qualified for a conventional mortgage. Maybe we wouldn't be
in the great predicament we have been in since 2008.
Under Wall Street reform, Richard Cordray will be there to prevent
those families from being ripped off again. Fixing our broken system
was not easy, and it is still not over. We are still fighting to keep
the ground we have gained against special interests.
The longer this nomination is delayed, the more consumers will
suffer. Without a Director, the Consumer Financial Protection Bureau
cannot carry out some of its most vital functions, including regulating
payday lenders, pawn shops, private student loan companies, those that
make unscrupulous and predatory loans on our military families--we
heard Senator Reed, who has great experience in this, talk about that--
giving them an unfair advantage at the same time as they do that over
community banks and credit unions that are regulated, that are good and
that play by the rules.
Now is a time to work together to make that happen. I ask that my
colleagues stop playing games. Let us go to a final up-or-down vote on
Mr. Cordray.
Republicans have continued to couple Mr. Cordray's nomination to
weakening the Consumer Financial Protection Bureau, which is
unprecedented. Never in Senate history has a nominee been opposed in
the Senate because of opposition to the whole agency for which he or
she has been nominated.
I say to my Republican colleagues, let's stop playing games with the
protections American consumers need. Work with us to do the job we were
elected to do and confirm this nominee. Work with us to protect
consumers.
We have come a long way toward a middle ground in creating this
agency with checks and balances to begin with. The time has come for
Republicans to join us in governing.
I yield the floor.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. VITTER. Mr. President, there has been a lot of wild rhetoric,
quite frankly, hyperbole, exaggeration. I wanted to try to bring this
discussion and this debate back to reality. To do that, I wanted to
remind folks that conservatives objecting to this nomination have, from
the very beginning, laid out three very narrow, specific, concrete
reforms we are seeking. So this notion that we are against consumer
protection, we are trying to gut CFPB, is silly. Let's get back to
reality. Let's get back to what we have said from the very beginning:
We want these three important reforms.
First of all, we think it is very important for the single Director,
a new czar quite frankly, a credit czar, to be replaced with a board to
oversee this Bureau. That is how other comparable agencies operate. The
best example--the best comparison--is the SEC. I think that is a
critical check on the Bureau's authority to have a board that can
discuss and come up with a consensus, not a single agency.
Secondly, related to that, there should be safety and soundness
checks for the prudential financial regulators who oversee the safety
and soundness of financial institutions. One of the core reasons we had
the 2008 financial crisis is we had political agendas run amok with
regard to financial institutions with no safety and soundness checks.
We are putting that same problem on steroids in this new all-powerful
bureaucracy. Again, point No. 1, very specific, very concrete, very
commonsense reform that we have proposed from the beginning is a safety
and soundness check.
Third, and perhaps most important, the Bureau should be subject to
the congressional appropriations process so there is some oversight and
accountability from the American people and their representatives. That
is the norm. That sort of check and balance, that oversight and
accountability, is absolutely the norm. It is way outside the norm to
have no oversight and accountability because, as it stands now, this
new superbureaucracy has an unlimited check that it gets from the
Federal Reserve--never has to get an appropriation, never has to answer
a single question from the people or their representatives.
Again, the CFPB, as it sounds now, draws its budget directly from the
revenue of the Federal Reserve. By the way, this revenue would
otherwise be deposited into the Treasury paying down the debt. The CFPB
is not just about mega institutions, mega banks--more hyperbole that
has been thrown on the floor--but anyone, any business, for instance,
that offers four or more payment installments and an installment plan.
Sure, that includes Citibank. It also includes your dentist, your
vet, your local electronics store. CFPB right now is so unlimited in
their authority that they are able to limit or prohibit the terms of
any such product or service, has power over marketing of any such
product or service in its jurisdiction with, again, the Federal Reserve
as its basically unlimited piggy bank.
I think these concerns we have are pretty darn fundamental and have a
lot of common sense in them. Again, we have three very specific,
concrete reforms we want advanced. We are not trying to gut the CFPB.
Those reforms would not gut it--not against consumer protection. Those
reforms would still have a sound, strong consumer protection agency in
place.
[[Page S8426]]
I think the American people deserve a more honest debate than, quite
frankly, they are getting in a lot of this. This notion that if we are
against ObamaCare, we are against all improvement of the health care
system is silly. I think Americans get that as their health insurance
premiums go up significantly now, by every accounting, by every
independent source, well beyond what they would have gone up otherwise.
Being against that is not being against health care reform. We heard
even earlier, if we are against the stimulus plan, we are against
economic recovery. That is silly. I think Americans know that now that
we are still stuck at very high unemployment. How is that recovery
working out for everyone?
I was against the stimulus because I was for economic recovery, and
it is the same thing here. We need to advance the interests of the
American people, certainly including consumers. But we do not need an
all-powerful, new czar in Washington who can hurt everyone, including
consumers.
So we continue to advance three very specific, concrete, commonsense
reforms. That is all we want. That does not gut CFPB. That is not
against consumer protection. It is against unbridled, unprecedented
authority. The American people, agency after agency, issue after issue,
have seen the effects of that sort of unbridled, virtually unlimited
Federal Government authority in the last 2 years. They do not like it.
Mr. RUBIO. Earlier this week in Kansas, President Obama tried to
score political points by chiding Senate Republicans for refusing to
vote on the confirmation of Richard Cordray to be Director of the so-
called Consumer Financial Protection Bureau--CFPB--saying we refuse to
let him do his job. And the President asked, Why? I am happy to answer
his question, again.
Earlier this year, I joined 44 other Senators in recommending to the
President three necessary reforms for the CFPB in order to improve
accountability in its operations. Specifically, we asked that a board
of directors be established to oversee it, that the agency be subjected
to the regular congressional appropriations process, and for the
establishment of a safety and soundness check for the prudential
regulators.
We made clear to the President that without these reforms we would
not vote to confirm any nominee to run the CFPB, regardless of
political affiliation or qualifications. The President chose to ignore
our suggestions. Although the President frequently pays lip service to
accountability in the regulatory process, when push came to shove, he
made this serious issue just another talking point.
President Obama is now trying to pressure my colleagues to vote to
confirm Mr. Cordray by traveling around the country giving speeches. I
want to reiterate that I will not vote to confirm any director for this
rogue bureaucracy until appropriate checks and balances are put into
place. President Obama promised that ``transparency and accountability
will be a hallmark of my administration'', making his refusal to make
CFPB more transparent especially disappointing.
Without reform, CFPB's director would serve with unprecedented and
unconstitutional amounts of power. The director would have the power to
decide what rules are issued in the name of consumer protection, how
funds are spent, and how its enforcement authority will be used. In
short, it empowers a single, unelected person with seemingly endless
and unchecked authority. This bureaucracy holds the sweeping ability to
limit choices when it comes to commonly-used financial products such as
home equity loans, credit cards, and student loans. Simply put, a
designation from the CFPB director saying these products are
``abusive'' could restrict the availability of credit to consumers and
increase the cost of goods or services for all Americans.
This year alone, over 70,000 pages of new regulations have been added
to the books from agencies such as the Environmental Protection Agency
and the National Labor Relations Board, oftentimes without any
compelling justification for their existence. The last thing job
creators in America need is more uncertainty from a powerful government
agency such as the CFPB that will receive a blank check for a half
billion dollar budget with virtually no input from Congress.
President Obama has urged the American people to ``help hold [him]
accountable''. I stand with my Republican colleagues in an effort to do
just that. The truth is we need transparency in government that
provides greater confidence that regulations are designed to protect
consumers from unfair practices, without destroying jobs. Until basic
transparency requests are made, I will not support allowing the CFPB to
operate with unaccountable leadership.
Mr. CRAPO. Mr. President, both sides agree that everyone benefits
from a marketplace free of fraud and other deceptive and exploitative
practices. The disagreement is over the best way to structure our
Federal regulatory agencies to accomplish this goal and provide
accountability.
One of the lessons of the financial crisis is that we need a
supervisory program that looks and considers how safety and soundness
and consumer protection work together and reinforce better and safer
services to banking customers. Far too often, supervision either looked
at consumer issues in isolation--promoting access to credit and home
ownership--or it looked at safety and soundness in isolation, such as
ensuring that customer information was legally accurate but not asking
whether it was understandable to bank customers.
We should have strengthened the link and coordination between
prudential supervision and consumer protections rather than severing
it. Instead Congress institutionalized this separation by creating a
Consumer Financial Protection Bureau and blurred the role and
accountability of the prudential regulators and the new Bureau.
Mortgage underwriting is a good example of an issue that was found
lacking before the financial crisis and has the potential to be subject
to an even more bureaucratic regulatory system going forward. I say
potential because it is unclear to me where the authority of the Bureau
stops and where the authority of the prudential regulators overlaps on
several important issues that will likely cause confusion and
potentially inconsistent regulatory approaches. Already we are seeing
conflicts among regulators with different regulators adopting different
consumer protection rules and duplication in examinations.
From my perspective, the new Bureau is a massive, expensive
government bureaucracy that is immunized against meaningful oversight
by either Congress or the President, and dramatically extends the
Federal Government's control over the economy.
According to analysis from Andrew Pincus, a partner in the law firm
Mayer Brown LLP:
The Bureau's structure has a number of features that, when
taken together, concentrate an amount of unchecked authority
in a single individual--the Director--that is unprecedented
for a federal agency that regulates private entities and
individuals:
First, the Bureau will be headed by a single Director with
complete, unilateral authority to make all regulatory and
enforcement decisions and to hire and fire all personnel,
including his or her own deputy.
Second, the Bureau's Director does not serve at the
pleasure of the President. Rather, during his or her five-
year term, the Director may be removed only for inefficiency,
neglect of duty, or malfeasance in office. That standard
eliminates the President's power to remove the Director based
on a policy disagreement: once nominated and confirmed, the
Director cannot be overruled by the President.
Third, the Bureau is exempt from the congressional
appropriations process. It is funded instead by a transfer of
money from the Federal Reserve in an amount determined solely
by the Director, subject only to a cap that already exceeds
$550 million, will increase 10% for the next fiscal year, and
is subject to automatic inflation adjustments thereafter.
While I appreciate the willingness of Richard Cordray to serve and
answer questions, I can't support the consideration of any nominee to
be the Director of the Bureau until the agency is reformed to make it
more accountable and transparent.
First, we would establish a board of directors to oversee the Bureau.
This would allow for the consideration of multiple viewpoints in
decisionmaking and would reduce the potential for the politicization of
regulations. A board of directors structure is consistent with the
organization of the Federal Reserve
[[Page S8427]]
Board, National Credit Union Administration, FDIC, SEC, CFTC, and
Federal Trade Commission.
Second, we would subject the Bureau to the congressional
appropriations process to ensure that it doesn't engage in wasteful or
unnecessary spending. This also gives Congress the ability to ensure
that the Bureau is acting in accordance with our legislative intent.
The SEC, CFTC, and the Federal Trade Commission have long been subject
to the appropriations process for the same reasons.
Finally, we would establish a safety and soundness check. This would
strengthen the link and coordination between prudential supervision and
consumer protections.
Given the enormous impact the Bureau will have on the economy, it is
important for Congress to revisit its structure and authorities to make
it more accountable and transparent.
Mrs. MURRAY. Mr. President, I come to the floor to speak about the
nomination of Richard Cordray to lead the Consumer Financial Protection
Bureau and to urge my colleagues to join me in voting in support of his
confirmation.
In July of last year, I was proud to join many of my colleagues in
the Senate to pass comprehensive Wall Street reform legislation that is
already working to protect middle-class families, hold Wall Street
accountable, and put in place policies to make sure taxpayers will
never again be left holding the bag for the big banks' mistakes. I
supported this legislation because for far too long the financial rules
of the road had not favored the American people. They were tilted
toward big banks, credit card companies, and Wall Street, and they were
twisted and abused to make sure no matter what happened, the financial
industry would come out ahead.
When the economy was roaring, the big banks made enormous sums of
money and handed out huge bonuses to their employees. But when the
products they created brought down the banks and pulled Main Street
down with them, it was the taxpayers who had to foot the bill to
prevent absolute calamity. Wall Street had a pretty good system going
for a while: Heads they won, tails the taxpayers lost. To correct this,
we fought to pass Wall Street Reform last year over Republican
objections, and we took a huge step in the right direction. We
strengthened the rules. We increased the oversight. And critically, we
created the first-ever agency dedicated to protecting middle-class
families, seniors, and small business owners from the financial fraud
and scams that have devastated so many.
The mission of this new Consumer Financial Protection Bureau is
clear: to make sure that consumers come first--that the financial
industry can no longer pull fast-ones on their customers--and,
fundamentally, that the markets for consumer financial products and
services actually work for all Americans. The CFPB's job is to help
consumers understand the financial products that are being marketed to
them every day because we know the big banks win when the American
people don't understand the fine print. And it is to make sure that the
financial firms are playing by the rules and to stand up for the
American people and enforce those rules if consumers are being lied to,
scammed, or cheated.
Over the last year the CFPB has been staffing up and ramping up and
has already started working to protect consumers. But without a
confirmed Director, they are simply unable to do everything possible to
stand up for middle-class families. Their hands are tied. Without a
confirmed Director, the CFPB doesn't have the full authority to protect
consumers who use non-bank financial institutions such as payday
lenders, credit-reporting agencies, and debt collectors, which are
services many working families depend on, as well as so many of our
Nation's veterans and servicemembers. This isn't right. We created the
CFPB to protect all families and consumers, and we need to confirm a
Director to give them the tools they need to do that.
I was proud to support President Obama's appointment of Elizabeth
Warren to help set up the new Bureau. I think she did a fantastic job,
and I am deeply disappointed that Republicans were so opposed to her
work standing up for middle-class families against the big banks that
they said they would block any attempt to name her as full-time
Director. I thought the way Elizabeth Warren was treated by Senate
Republicans was truly shameful. But she hasn't given up, and she is
still fighting for the middle-class families and consumers she has
always been such a passionate advocate for.
I am very glad that President Obama nominated another strong advocate
for the middle-class to fill this role. Richard Cordray has been
serving as the Chief of Enforcement at the CFPB, so he understands the
mission and the need to fight for the rules that protect consumers. He
previously served as attorney general and State treasurer in Ohio,
where he amassed a strong record of standing up for seniors, investors,
business owners, and consumers. He has received support from Democrats
and Republicans, and he is the right man for the job.
But the Republicans who have come out in opposition to this
nomination don't seem to be opposing Richard Cordray. They seem to be
opposed to the very idea that anyone should be in a position to stand
up for consumers and families in the financial products market. They
want to keep this position open because they are worried that this
agency is going to have too much power.
Well, the Consumer Financial Protection Bureau was designed to have
power. It was created to put that power in the hands of middle-class
families and consumers and to take some away from the big banks and
credit card companies that had it all before.
So once again we have a simple choice before us in the Senate: Do you
stand up for middle-class families who deserve to be protected from
scams and financial gimmicks or do you stand up for the big banks and
Wall Street firms that are scared to death that a powerful consumer
advocate will cut into their fat profits and big bonuses? I know where
the American people stand. I stand with them. And I truly hope that
Republicans have a change of heart and stand with us to confirm this
highly capable and effective nominee so the CFPB can do the job the
American people expect and deserve.
Mrs. BOXER. Mr. President, I wish to express my strong support for
the President's nomination of Richard Cordray to be the first Director
of the Consumer Financial Protection Bureau, CFPB. Mr. Cordray is an
exceptionally well-qualified nominee who deserves an up-or-down vote in
the Senate.
The opposition to this nomination has nothing to do with Mr.
Cordray's credentials and is yet another attempt by Republicans to
undermine the CFPB and stop it from cracking down on unscrupulous and
fraudulent practices by big banks, credit card companies, payday
lenders, and other financial firms.
The CFPB was established as part of the Dodd-Frank financial reform
legislation that overhauled our banking system. Before the financial
crisis, no single agency coordinated Federal consumer protection. Banks
and financial companies could choose their own regulator, which enabled
them to avoid regulations with real teeth. The failure of Federal
agencies to coordinate and the lack of any effective consumer watchdog
agency allowed financial firms to pursue deceitful lending practices
that hurt American families and caused the worst recession since the
Great Depression.
The CFPB was created to solve this problem and to make sure that
financial markets work for all Americans, not just big business. The
CFPB has already begun reviewing many areas of consumer protection law,
including mortgage disclosure forms. It will enforce new rules for
credit cards, require mortgage servicers to better assist homeowners in
avoiding foreclosure, and enforce new rules on bank overdraft fees.
President Obama appointed Elizabeth Warren, a respected law professor
and dedicated consumer advocate, to set up the CFPB. Elizabeth Warren
was selected for her long history of independent, unflinching consumer
advocacy, and under her leadership the CFPB had a running start. But
Republicans adamantly opposed her as CFPB director, before she had even
been nominated. They knew she would crack down on abusive practices in
the banking and credit card industries. And they know that by law, the
CFPB cannot exercise its full authority without
[[Page S8428]]
a confirmed Director. That is why 44 Republican Senators signed a
letter promising to oppose any nominee, of any party, until their
demands to cut back the agency's power and independence are met.
Mr. Cordray would be an outstanding leader of the CFPB. He currently
leads the CFPB's Enforcement Division. He has built his career around
protecting the public interest, reflecting his commitment to consumers
and his dedication to fairness. After having been a State
Representative, Solicitor General and Treasurer in the State of Ohio,
Mr. Cordray was elected Attorney General of Ohio in 2008. In this role,
he prosecuted fraudulent foreclosures and predatory lending, and
recovered more than $2 billion for Ohio's retirees, investors, and
business owners.
Mr. Cordray's nomination has broad, bipartisan support. Attorneys
General from 37 States, representing both political parties, signed a
letter in support of this nomination, calling him ``both brilliant and
balanced,'' with a ``superior knowledge of the financial services
marketplace.'' Sixty-one mayors from around the country, led by Mayor
Villaraigosa of Los Angeles, also wrote to support his confirmation.
The California Reinvestment Coalition, Center for Responsible Lending,
Consumers Union, Main Street Alliance, NAACP, National Association of
Consumer Advocates, AFL-CIO, AFCSME, International Brotherhood of
Teamsters, SEIU, UAW, and UFCW have all expressed support for Mr.
Cordray, and for confirming a director so that the CFPB can operate as
intended.
It is stunning that Republicans continue to block any effort to rein
in the type of reckless and abusive behavior that caused the worst
economic crisis since the Great Depression.
I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. BROWN of Ohio. Mr. President, it never ceases to amaze me to hear
my colleagues whose first loyalty is to Wall Street banks, who continue
to make excuses for being against putting a consumer cop on the beat.
This is an office that will be a few-hundred-million-dollar office,
this consumer protection--this consumer cop on the beat.
But this consumer cop on the beat has to look at trillions of dollars
in mortgages, has to protect consumers when there are $30 billion in
overdraft fees alone that banks are charging, when many times those
overdraft fees are because consumers simply cannot figure out the fine
print and do not understand the terms of the agreement.
In the end, again, people on this floor and their special interest
friends in the Congress, the friends of the Wall Street banks, the
friends of these interest groups that continue to fleece the American
people--if we had had Rich Cordray or Elizabeth Warren, for that
matter, the consumer cop on the beat, would we have had those kinds of
foreclosures in places such as Cleveland and Dayton? Would we have had
these fly-by-night mortgage brokers from Ameriquest and New Century and
others moving in and taking advantage of people? I am not sure we would
have.
But my Republican colleagues, my colleagues who always do the
bidding--not all of them, but many of them always do the bidding of
these special interest groups that have inflicted far too much damage
on this economy--I hear all this, that if we would just make some
changes in the agency. I talked to the Senate Historian because I have
heard these arguments: If we just change this agency, I would vote for
it. First of all, I talked to the Senate Historian, who said: Never in
the history of the Senate has one political party tried to block the
nomination of a Presidential appointee based on wanting to change the
agency. It is nothing about the qualifications of Rich Cordray. I know
Rich Cordray better than anybody in this institution. He is from my
State. He was our attorney general. He was the State treasurer. He was
county treasurer. He was a State legislator. I have known Rich for over
20 years. I know he is qualified. Many of my colleagues on both sides
say he is qualified.
But they say: We want to change the agency. We worked with
Republicans to change this agency as it went through the process in
Dodd-Frank. They kept shifting the goalposts. In order to accommodate
Republican concerns, we made the CFPB a bureau at the Federal Reserve.
Many of us thought it should be totally independent. We were willing to
make that concession in order to get Republican support.
They then, after we did that, asked for regular GAO audits of the
books. They got them. The GAO said the CFPB passed with flying colors.
They said: We do not like Elizabeth Warren, give us someone else.
Elizabeth Warren withdrew. She was a great consumer activist, would
have been very good at this. We are replacing her--the President is--
with Richard Cordray from Ohio. He will do this job well.
Then, after he is appointed, they say--and Richard Cordray has
support from banks and credit unions and consumer groups. That is still
not good enough. They asked the President not to recess appoint a
Director. The President agreed to that. They are moving the goalposts.
Now they are saying they will not approve anyone to serve as the
Director of the consumer bureau unless we change the Bureau.
In other words, to protect their Wall Street friends, they are
saying: We are not going to allow a Director to be in place unless we
weaken this agency. As Senator Reed from Rhode Island said, would we
not appoint a Director of the Food and Drug Administration in the
future until we rolled back all food safety laws? Are we not going to
protect the Consumer Products Bureau in the government, in the
Department of Commerce, until we roll back child toy safety laws? That
makes no sense.
This was voted with more than 60 votes--61 or 62, if I recall--a
supermajority in this Congress 2 years ago. We allowed all kinds of
amendments. We accepted many changes that Republicans wanted. But in
the end, it is a choice: Are we for consumers or are we for Wall
Street? We know who it is. I am not asking my colleagues to vote for
him. I am asking my colleagues to let us have an up-or-down vote. Let
us vote on it. Do not filibuster. Do not block the vote.
Understand, this is a vote coming up that is to break a filibuster,
to break a Republican filibuster, where Republican Senators almost
always are flacking for Wall Street. They do that. It never ceases to
amaze me.
So all we ask is an up-or-down vote. Vote yes for cloture so we can
have an up-or-down vote for Attorney General Cordray.
I yield the floor and ask for a ``yes'' vote.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. SHELBY. I yield back my time.
Cloture Motion
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the Chair directs the clerk to read the motion.
The legislative clerk read as follows.
Cloture Motion
We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the nomination
of Richard Cordray, of Ohio, to be Director, Bureau of
Consumer Financial Protection:
Harry Reid, Joseph I. Lieberman, Jeff Bingaman, Patty
Murray, Patrick J. Leahy, Kent Conrad, Sheldon
Whitehouse, Jack Reed, Benjamin L. Cardin, Barbara
Boxer, Al Franken, Max Baucus, Richard J. Durbin,
Robert Menendez, Jon Tester, Sherrod Brown, Tom Harkin,
Tim Johnson.
The PRESIDING OFFICER. By unanimous consent, the mandatory quorum
call is waived.
The question is, Is it the sense of the Senate that debate on the
nomination of Richard Cordray, of Ohio, to be Director, Bureau of
Consumer Financial Protection, for a term of 5 years, shall be brought
to a close?
The yeas and nays are mandatory under the rule.
The clerk will call the roll.
The legislative clerk called the roll.
Ms. SNOWE (when her name was called). Present.
Mr. DURBIN. I announce that the Senator from Massachusetts (Mr.
Kerry) is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 53, nays 45, as follows:
[[Page S8429]]
[Rollcall Vote No. 223 Ex.]
YEAS--53
Akaka
Baucus
Begich
Bennet
Bingaman
Blumenthal
Boxer
Brown (MA)
Brown (OH)
Cantwell
Cardin
Carper
Casey
Conrad
Coons
Durbin
Feinstein
Franken
Gillibrand
Hagan
Harkin
Inouye
Johnson (SD)
Klobuchar
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Manchin
McCaskill
Menendez
Merkley
Mikulski
Murray
Nelson (NE)
Nelson (FL)
Pryor
Reed
Reid
Rockefeller
Sanders
Schumer
Shaheen
Stabenow
Tester
Udall (CO)
Udall (NM)
Warner
Webb
Whitehouse
Wyden
NAYS--45
Alexander
Ayotte
Barrasso
Blunt
Boozman
Burr
Chambliss
Coats
Coburn
Cochran
Collins
Corker
Cornyn
Crapo
DeMint
Enzi
Graham
Grassley
Hatch
Heller
Hoeven
Hutchison
Inhofe
Isakson
Johanns
Johnson (WI)
Kirk
Kyl
Lee
Lugar
McCain
McConnell
Moran
Murkowski
Paul
Portman
Risch
Roberts
Rubio
Sessions
Shelby
Thune
Toomey
Vitter
Wicker
ANSWERED ``PRESENT''--1
Snowe
NOT VOTING--1
Kerry
The PRESIDING OFFICER. On this vote, the yeas are 53, the nays are
45, and one Senator responded ``present.'' Three-fifths of the Senators
duly chosen and sworn not having voted in the affirmative, the motion
is rejected.
Vote Explanation
Mr. KERRY. Mr. President, I was necessarily absent for the cloture
vote on the nomination of Mr. Richard Cordray to be Director of the
Consumer Financial Protection Bureau. If I were able to attend today's
session, I would have supported cloture on this nomination.
____________________