GOP blocks Obama nominee to head financial agency

WASHINGTON — The new watchdog agency designed to shield consumers from the excesses behind the 2008 financial crisis lost a shot Thursday at operating at full strength as the latest partisan battle to paralyze Congress snarled the White House's nominee.

Senate Republicans were near unanimous in voting to block a former Ohio attorney general, Richard Cordray, from becoming director of an agency they said had too much power and too little accountability.

They said that until the Obama administration agrees to changes at the Consumer Financial Protection Bureau, they will keep blocking President Barack Obama's pick from taking charge.

Democrats framed the standoff in political terms, saying Republicans wanted to gut an agency created to look out for consumer interests.

"Cordray and consumer protection are being blocked simply because Republicans want to protect Wall Street," said Sen. Robert Menendez, D-N.J.

The vote to overcome the GOP filibuster was 53-45, seven short of the 60 needed to advance the nomination. One Republican, Sen. Scott Brown of Massachusetts, joined Democrats in support of Cordray. Sen. Olympia Snowe, R-Maine, voted "present."

While the agency officially began business in July, the deadlock limits what it can do. It can oversee existing bank regulations. But without a director, it cannot issue new rules dealing with nonbank entities such payday lenders, private student loan providers and mortgage servicers that have been the source of predatory lending practices.

Raj Date, a special adviser to the treasury secretary, said the bureau is "already hard at work, helping to fix broken consumer financial markets." But, he said, "we are only able to supervise banks, not any of the nonbank companies that were responsible for many of the most problematic products and practices leading up to the financial crisis."

Obama said after the vote that there was no reason to deny Cordray the top spot. He did not rule out a recess appointment, whereby a president makes a temporary appointment to a government post when Congress is not in session.

Republicans this year have been successful in stopping the White House from making such appointments.

Sen. Chuck Schumer, D-N.Y., said the president "should do everything within his powers to get Mr. Cordray on board."

The agency was a centerpiece of the financial overhaul bill signed into law last year.

Republicans largely opposed that legislation and have since sought to change some of its provisions. They dismissed Democratic claims that they were favoring Wall Street over Main Street in blocking the highly regarded Cordray, now serving as enforcement chief at the bureau.

There's no disagreement, said Sen. Richard Shelby, R-Ala., about the need to bolster consumer protection. "The only real point of contention is whether the new bureau of consumer financial protection will be accountable to the American people," said Shelby, the top Republican on the Senate Banking, Housing and Urban Affairs Committee.

Last May almost every Republican senator signed a letter to Obama saying they would oppose any bureau nominee until changes were made in its operation.

They're pushing to replace the director with a bipartisan board. They want to subject the bureau, now is under the Federal Reserve's jurisdiction, to the congressional appropriations process. They favor giving more banking regulators authority to overrule agency decisions.

"The president knew about these concerns months ago and he chose to dismiss them," said Senate Republican leader Mitch McConnell of Kentucky.