Senate Committee Approves SEC, Consumer Financial Bureau Chiefs

By and | March 19, 2013

A U.S. Senate panel voted to move forward two of President Barack Obama’s choices to lead financial regulatory agencies, but his pick of Richard Cordray to head the new consumer bureau likely still faces a tough path to final confirmation.

Democrats who control the Senate Banking Committee had enough votes to move ahead with Cordray’s nomination to lead the Consumer Financial Protection Bureau, but all 10 Republicans on the panel voted against him.

The committee showed little opposition to former U.S. Attorney Mary Jo White, who has been nominated to lead the Securities and Exchange Commission, voting 21 to one in her favor. The full Senate next must consider both candidates.

“I think both of the candidates are well qualified for the jobs they have been nominated for,” said committee Chairman Tim Johnson, a South Dakota Democrat.

If confirmed, Cordray and White would lead two of the agencies charged with cracking down on Wall Street misdeeds in the wake of the 2007-2009 financial crisis.

The full Senate likely will vote this week on White’s nomination before leaving town for the Easter break, a Senate Democratic staffer said on Tuesday. It was not yet clear when or if a vote would be held on Cordray’s nomination.

Business groups and Republicans have been complimentary of Cordray’s tenure during a temporary stint as the bureau’s director. But they want the bureau’s structure changed so that it is led by a bipartisan commission rather than a single director.

Republicans have also pushed to send the bureau through the standard appropriations process instead of funding it through the Federal Reserve. They are threatening to block Cordray’s confirmation until the White House agrees to such changes.

“I greatly appreciate that he has reached out to me and to Republican members of the committee,” said Senator Mike Crapo, the top Republican on the banking committee. “However the issue with his nomination is a broader debate over the structural creation of the new federal department…Regardless of the administration in charge, either Republican or Democrat, the CFPB structure needs to be revised,” he said.

Cordray’s position also has been called into question because Obama used a “recess appointment” to install him in January 2012. A court recently ruled that two similar appointments to the National Labor Relations Board were invalid because Congress was not officially in recess.

The ruling did not directly address Cordray’s position, but it still raises doubts about his tenure, Republicans say.

Democrats say the bureau’s structure is crucial to ensure its independence and effectiveness, and they say failing to confirm a director would hamstring the consumer bureau, one of Obama’s key accomplishments as part of the 2010 Dodd-Frank law.

“I believe it is past time for an up or down vote for Rich Cordray,” Elizabeth Warren, who set up the consumer bureau and has since been elected as a Democratic senator from Massachusetts, said in a statement.

“The Senate needs to focus on how to put an end to practices that cheat families in their mortgages and credit cards – not how to help the big banks.”


White, on the other hand, has faced much less opposition. Some advocacy groups have questioned whether her work as an attorney for Debevoise & Plimpton, where she did legal work for clients such as JPMorgan and former Bank of America CEO Ken Lewis, could create conflicts of interest.

Senator Sherrod Brown from Ohio, the only person on the committee to vote against White, said he would not block her confirmation by the full Senate but wanted to “send a message” about the financial industry’s influence on regulators.

“I’m concerned about the Wall Street bias in this institution, and I think there are a number of people to choose from that are not part of Wall Street for these really important regulatory bodies,” Brown told reporters.

“She’s very smart, she’s very aggressive. I hope she proves me wrong – that a person inside Wall Street can do the kind of job we need,” he said.

The panel on Tuesday voted to have White fill out the remainder of former chairman Mary Schapiro’s term, which expires in June 2014, after she stepped down early. Obama has nominated White to both fill out Schapiro’s term and for a full, five-year term at the helm of the SEC.

The banking committee could vote later on the full term, but determined a shorter position was the best bipartisan option now, a committee staffer said. Cordray’s nomination is for five years.

It was not immediately clear why the panel opted to delay voting on a full five-year term for White.

However, a Senate Republican aide told Reuters it is “common practice” to vote on a term at a time, and that it is likely the Senate may consider the longer term for White after Obama nominates more candidates.

SEC Chairman Elisse Walter, a Democrat, is currently serving beyond her term limit, and can only stay on board at the agency until the end of the year.

Republican SEC Commissioner Troy Paredes, meanwhile, also is approaching the expiration of his term, which ends in June.

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