Obama kicks off new fight over consumer watchdog

President Obama’s re-nomination of Richard Cordray to head the Consumer Financial Protection Bureau reignites the battle that raged last year over the structure of the regulatory agency created under the landmark Dodd-Frank financial-reform law.

Republicans have criticized the consumer watchdog agency, which regulates products ranging from home mortgages to credit cards. Their chief complaints center on the fact that the agency is run by a director rather than a board. They also dislike the agency's funding mechanism. The Federal Reserve Board, rather than Congress, allocates money for its operations.

The GOP will use Cordray’s confirmation process to rehash these concerns. The politics will mirror the first go-around in 2011. Democrats picked up two Senate seats in November but still fall five short of the 60 that would be needed if Republicans decided to filibuster the appointment. Obama ended up using a recess appointment to install Cordray at the head of the agency last year, bypassing the GOP senators who opposed his nomination.

The White House is bracing for a fight. Asked if the Obama administration was expecting “clear sailing,” press secretary Jay Carney told reporters: “I wouldn’t want to predict an outcome except to say that there are no objections to him on substance.”

He's right. The dispute won’t be about Cordray. The credentials of the former Ohio attorney general,who was first nominated in July 2011, have never been the issue for Republicans.  He now has a year-long track record at the CFPB, but his approach at the agency has been surprisingly cautious and marked by a focus, at least initially, on the administrative challenges of getting the new agency off the ground. Cordray’s agenda, according to Mark Calabria, director of financial-regulation studies at the libertarian Cato Institute, was “exactly the political strategy one would pursue if you’re trying to build support" for the agency and soothe fears among key constituencies, such as the financial industry, about the agency's mission.

And indeed, the first round of Republican comments to the news that Obama had selected Cordray to head the agency once again didn't focus on the man, but the bureau. The current structure concentrates power in one person's hands, Republicans say. And they don't like it. “No one person, I believe, should have so much unfettered power over the American people,” Sen. Richard Shelby, R-Ala., said at a September 2011 hearing on Cordray’s nomination.

Other independent agencies, as Republicans will tell you, are run by boards: The Fed, the Securities and Exchange Commission, the Commodity Futures Trading Commission, to name a few. The CFPB is more of an outlier in that regard (executive departments, such as Treasury, are run by secretaries who are answerable to the president and removable at will).

Sen. Bob Corker, a Republican who sits on the Senate Banking Committee, said he respected Cordray "as a substantive person who has shown thoughtfulness in writing regulation up to now," but said he still disagreed with the agency's structure. The Banking Committee will be the first hurdle in Cordray’s confirmation process.

Sen. Mike Crapo, the expected ranking Republican on the Banking Committee, said Thursday that he would oppose “any nominee” to direct the agency unless “key structural changes” were made. “If the president is looking for a different outcome, the administration should use this as an opportunity to work with us on the critical reforms we have identified to him,” Crapo said.