Chip Somodevilla/Getty ImagesRichard Cordray, President Obama’s nominee to lead the agency.
Richard Cordray’s bid to lead the Consumer Financial Protection Bureau moved a step forward on Thursday, as a Senate committee approved his nomination along party lines.
But with Senate Republicans united against the nomination, the move was largely symbolic.
Mr. Cordray, who currently leads the bureau’s enforcement division, now awaits scrutiny from the full Senate, where his nomination hopes are in doubt. Republicans have dug in against the bureau, vowing to block any nominee unless the new agency is subjected to additional oversight.
While the bureau now has authority to file lawsuits against Wall Street and inspect the books at a wide range of large banks, it will not gain some of its greatest authority over the lending industry until the Senate confirms a director. Under the Dodd-Frank Act, the bureau needs a leader before it can police many lightly regulated financial firms, including tens of thousands of payday lenders, mortgage firms and debt collectors.
“We’ve never really seen this before,” Senator Sherrod Brown, a Democrat on the banking committee who hails from Mr. Cordray’s native Ohio, said before the vote on Thursday. “We really should move forward on this.”
The Senate banking committee vote was 12 to 10, with the panel’s 10 Republicans opposing the nomination.
A partisan divide has shadowed the bureau since last year when it became a centerpiece of Dodd-Frank. In recent months, the rancor has centered on the vacancy atop the agency.
At first, vocal objections stymied the White House from naming a director. In July, as the bureau prepared to open its doors formally, President Obama selected Mr. Cordray over Elizabeth Warren, the Harvard law professor who set up the bureau.
Republicans now object not so much to Mr. Cordray, Ohio’s former attorney general and a five-time “Jeopardy” champion, but to the structure of the bureau itself. Senate Republicans are taking aim at both the agency’s financing and independence, seeking to constrain its authority over Wall Street.
In a letter earlier this year to President Obama, 44 of 47 Republicans threatened to oppose any nominee unless the bureau became a five-member commission, similar to the Securities and Exchange Commission, a move that would rein in the director’s considerable power to steer policy and enforcement cases. Republicans also want Congress to oversee the bureau’s spending. It currently functions as an independent agency within the Federal Reserve.
Ultimately. the Republican roadblock could scuttle Mr. Cordray’s nomination. Without at least a couple Republican votes, Democrats would be unable to gather the 60 votes necessary to end a filibuster and bring a vote on a nominee.
Senator Richard Shelby, the top Republican on the banking committee, called the vote on Thursday “premature.”
“The bureau must be fully accountable to the American people,” Mr. Shelby, a longtime lawmaker from Alabama, said in a statement. “The Republican proposal does not strip the bureau of any existing or new authority to protect consumers. We are simply seeking common sense changes.”
But Democrats and consumer advocates contend that new controls over the bureau’s purse strings — and the push to transform the bureau into a commission — would strip its authority at a time when tough regulation is needed. They also note that no other banking regulator is subject to the Congressional appropriations process, while the Office of the Comptroller of the Currency is run by a single director rather than a five-person commission.
“We call on all senators to stand up for families and confirm Richard Cordray as C.F.P.B. director,” said Lisa Donner, head of Americans for Financial Reform, an advocacy group. “Will you implement the law and make sure the C.F.P.B. can do its job helping people defend themselves from loan sharks big and small? Or will you block consumer protection and instead protect wrongdoing by companies that caused the financial crisis?”
As Ohio’s attorney general during the crisis, Mr. Cordray became known as an aggressive Wall Street watchdog. While federal regulators were slow to go after the nation’s leading financial institutions, Mr. Cordray sued the credit rating agencies, Bank of America and the lending arm of General Motors.
“I think you’re going to find he’s exceptionally talented,” said Treasury Secretary Timothy F. Geithner, who appeared before the banking committee on Thursday after the vote.
Mr. Geithner encouraged Mr. Shelby to “reconsider” his opposition to the appointment, saying he’s “always optimistic” that the Senate will confirm Mr. Cordray.
But Mr. Shelby, in a retort that drew a chuckle from the crowd, told Mr. Geithner not to “get optimistic on that.”
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