Will the Senate Compromise on the Cordray Confirmation?

by Jeff Sovern

From time to time, reports appear that Senator Portman is trying to broker a compromise that would permit confirmation of Richard Cordray as CFPB director.  And some, including Ballard Spahr's Alan Kaplinsky, have predicted that a compromise will be eventually be reached.  I don't have any inside information–it's not as if legislators or their staffers are calling me.  I certainly know less about what is happening in Congress than Senator Portman, and I suspect I know far less than Alan Kaplinsky as well. But here's why I'm skeptical about a compromise:

The Republican opponents of confirmation of Cordray claim that the Bureau's director has too much power. The director, they say, is not part of a commission, but can act based on his own views. He has a five-year term and can be removed only for cause, meaning that he need not fear firing if he angers people.  The Bureau gets its funding outside of the congressional appropriations process, and that frees the Bureau from having its funding reduced by legislators unhappy with its decisions.  But, as I have pointed out before, the Senate has had no difficulty confirming nominees to head the Office of the Comptroller of the Currency, including nominees of both Democratic and Republican presidents, and has even done so on a voice vote (reserved for non-controversial votes) when the Republicans had a majority of the Senate.  Accordingly, I view the Republicans' stated reason for opposition as a pretext.  As they also voted against creation of the Bureau in the first place, it seems inescapable that their real goal is to prevent the Bureau from acting.

That's why I think a compromise is unlikely. If Senator Portman attempts to broker a compromise that adds checks to the director's power, by for example, providing for a commission structure, that addresses only the pretext and not the real objection. Accordingly, I don't see why the Republicans would agree to it.  A commission would make it harder for the Bureau to protect consumers, but not impossible.  If your goal is to paralyze the Bureau, why would you agree to something that won't necessarily do that?  I think Senator Portman is trying to broker a compromise because he feels differently. He is from the same state as Cordray and so may be more receptive to his directorship.

Despite all this, there are a few ways I could see a compromise happening.  A director-less Bureau has power over banks but much less over non-bank lenders. That means the Bureau could insist on banks doing things in ways which rendered them less able to compete with non-banks.  Banks might respond by seeking confirmation of a director so that they can compete with the non-banks.  Or it mght be possible to broker a compromise in which the Republican senators get something they want more than disrupting the Bureau.  And as I say, I'm speculating here, so I could easily be overlooking something.

But still, it doesn't look good for consumers.  Wouldn't it be nice if politics were more honest?


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