WASHINGTON - Republicans in the Senate this morning blocked President Barack Obama's nomination of former Ohio Attorney General Richard Cordray to head the Consumer Financial Protection Bureau, despite open admissions by leading GOP lawmakers that he was "eminently qualified."
"Let's be clear - this isn't about the overwhelmingly qualified Richard Cordray," declared Tom McMahon, executive director of Americans United for Change. "This is about the Republicans doing the banks bidding by standing with them against the 99 percent."
Sen. Richard Shelby of Alabama, ranking Republican member on the Senate Banking Committee, said, at this morning's hearing, that he was impressed with the nominee's qualifications. Noting that Cordray has worked his way up from a job at McDonald's to clerking for judges to Attorney General of Ohio, other Republican senators on the committee said they admired his "work ethic."
The GOP senators nevertheless blocked his nomination with Shelby saying they really don't care right now about his qualifications. What they oppose, they said, is the idea of a consumer protection board itself because, as they see it, the board has too much power over the banks.
"I'm sure you have a good background," Shelby told Cordray, "but you're caught between a substantive debate. And that's going to have to be resolved, I think, before we move this nomination further."
"They blocked this nomination because they, the Republican senators, received more than $125 million from the financial sector to do their bidding," said McMahon.
"This unbelievably selfish act on the part of Republicans continues to expose all of us to the tricks and traps of big banks and credit card companies," he said.
"The consumer protection agency exists because a majority of democratically elected lawmakers passed a law and a democratically elected president signed it. Now a minority of Senators representing a minority of the country are exploiting procedural rules like the filibuster to prevent that law from taking place," wrote Jonathan Cohn in the New Republic.
When the Dodd-Frank financial reform law was first being discussed in Congress, Wall Street firms threw millions of dollars into lobbying campaigns against it and were able to get lawmakers to water down key parts of the law.
After the president signed the law, Wall Street actually stepped up spending against it. Disclosures in the Wall Street Journal show that 26 of the financial firms that spent the most in 2010, when the law was being debated, actually spent $27 million in the first three months of this year, a 2.7 percent increase from the $26.3 million they spent during the same period a year earlier.
Consumer advocates totally reject GOP claims that their concern about the law is lack of accountability by the consumer board to Congress. They point to a long history of lobbying against finance reform that began before Dodd-Frank was passed.
Weakening the Consumer Protection Bureau is the first and major step, consumer advocates say, in the GOP plan to nullify the Dodd-Frank law.
Second, the advocates note, is to water down derivatives reform, with Republicans pushing to exempt more and more financial transactions from the aspects of the reform law that govern derivatives.
A third GOP approach is to eliminate the section of the law that requires lenders to hold on to a portion of the loans they make, so they can't divorce themselves entirely from their shoddy transactions, the advocates say.
Under Dodd-Frank the consumer agency has authority over nonbank financial companies that often go unregulated. These entities, including payday lenders, credit reporting agencies, mortgage companies and debt collectors, have traditionally preyed on people with lower incomes, tricking them into mortgages with rising rates, charging high interest rates for short term loans and using abusive debt collection methods.
However, the agency needs a chairperson in order to implement the regulations, and therefore the Republicans main push is to block any appointment, advocates say.
Despite Republican success in blocking the appointment this morning, those counting on getting the White House to go along with plans to weaken finance reform did not have a very good week.
President Obama talked about the issue in his speech in Kansas this week.
"Consumers deserve to have someone whose job it is to look out for them," he declared. "I intend to make sure they do. And I want you to hear me Kansas: I will veto any effort to delay or defund or dismantle the new rules we put in place," he said.
Photo: Rich Cordray, Assistant director of Enforcement for the Consumer Financial Protection Bureau (CFPB), left, with Treasury Secretary Timothy Geithner, who encourages Congress to approve Cordray's nomination to head the CFPB, Dec. 1, in Washington. (Jacquelyn Martin/AP)