As part of their efforts to break the GOP’s filibuster of the director of the Consumer Financial Protection Bureau, Democrats warn that the bureau will be weakened without someone running the show, and that acceding to GOP demands would be even worse, fundamentally weakening it well beyond the term of any one director.
But in a tremendous irony, Democrats’ secret weapon in this fight could turn out to be the financial industry itself – the very institutions CFPB is tasked with regulating.“The Dodd-Frank bill was built with a fallback position in it, so that if the consumer agency was not able to come up with mortgage rules by a date certain, then rules that were enumerated in the statute would just automatically go into effect,” said Sen. Elizabeth Warren (D-MA) at a Capitol briefing on Wednesday. “The consumer agency has come up with a set of rules, and they’re good rules. They’re rules that work for consumers; they’re rules that work for the big financial institutions; they’re rules that work for the community banks and the credit unions. If there is a doubt about whether or not the consumer agency can issue those rules, the banks are in the position of great uncertainty.”
Warren wouldn’t be a senator today if it weren’t for the bureau. She hatched the idea of standing up a federal agency dedicated to consumer protection years ago as an advocate and an academic. Her work led to the creation of the CFPB in the Dodd-Frank Wall Street reform bill. President Obama ultimately appointed her to nurture the bureau through its infancy. But thanks largely to GOP opposition – and, indeed, interference by some Democrats – Obama nominated Richard Cordray, a former attorney general from Ohio, to be its first official director instead.
Opposing Warren turned out to be a tactical error on Republicans’ part. Blocked from taking the reins at CFPB, Warren instead challenged and ultimately defeated Sen. Scott Brown (R-MA) in the Massachusetts Senate race last year.
But her candidacy didn’t shake the Republicans’ determination to weaken the CFPB. They filibustered Cordray’s nomination, too, demanding Democrats help them gut the agency statutorily before they would agree to confirm anybody to direct it. Obama ultimately appointed Cordray to head the bureau unilaterally using the recess appointment power, but that appointment expires at the end of the year, and may even be in legal jeopardy thanks to a recent decision by the D.C. Circuit Court of Appeals.
So it now falls to Senate Democrats to somehow confirm Cordray over the objections of Republican leaders. And they’ve settled on a shrewd tactic – perhaps their only immediate source of leverage over their GOP counterparts: recruit financial stakeholders to pressure Republicans to end their filibuster for the sake of smoother sailing.
But it’s a long shot. Republicans have sustained their blanket filibuster for nearly two years. And absent a strong push by financial institutions or perhaps a consistent public outcry, there’s nothing Democrats can do to get Cordray confirmed on their own, short of weakening the filibuster rules themselves, which they’ve already declined to do this session.
I asked Warren whether she and Democrats would revive their filibuster reform efforts if Cordray isn’t confirmed before his recess appointment expires at the end of the year. She’s keeping her powder dry for now.
“I can’t speak for anyone else, but I think it is fundamentally wrong to hold up a vote on Rich Cordray,” Warren said. “The president has nominated him, he appointed him during a recess, he has now re-nominated him. Rich has proven what he can do. This agency has proven what it can do. The agency has been signed into law. We’ve got every piece we need. And the notion that a minority can hold up the laws of the United States by using the filibuster on an appointment is fundamentally wrong.”