Hooray for Cordray

16 July 2013 By Daniel Indiviglio

A compromise by U.S. legislators avoids a nasty showdown that could have led to even greater political dysfunction in Washington and roiled financial markets. The price, however, was the confirmation of a watchdog the money industry loves to hate.

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The U.S. Senate struck a deal on July 16 to allow a vote on the appointment of Consumer Financial Protection Bureau Director Richard Cordray. He is expected to be confirmed. President Barack Obama utilized a controversial recess appointment to install the regulator as head of the new agency in 2012. With a director in place, the watchdog could exercise additional powers, like supervising non-bank financial companies.
Republicans had refused to allow a vote on Cordray’s nomination because they opposed the structure of the bureau, which was created by the Dodd-Frank Act. In particular, they wanted its funding subject to congressional oversight instead of being provided by the Federal Reserve; and for the agency to adopt a board structure.
Republicans had been able to block Cordray because congressional rules require 60 out of 100 senators to agree on closing debate and bringing a vote. That enables the 46-member Republican minority to block nominees and legislation. Democratic Senate Majority Leader Harry Reid threatened to invoke the so-called “nuclear option,” which would change Senate rules if Republicans continued to block Cordray.
They consented to a vote, as long as Reid agreed not to eliminate their filibuster power and also force President Barack Obama to nominate two new nominees to replace his National Labor Relations Board picks who were recess-appointed at the same time as Cordray. A U.S. federal appeals court ruled in January that those NLRB recess appointments were invalid. A similar challenge had been pending against Cordray.

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