Last Updated May 6, 2011 2:32 PM EDT
The lawmakers yesterday vowed to block any candidate -- whatever party the person belongs to -- from getting the job unless Congress changes the new agency in ways that would severely restrict its authority. In a letter to President Obama, they demanded that the CFPB's single director be replaced by a commission; that lawmakers, not the Federal Reserve, control the bureau's budget; and that other banking regulators have greater power to veto its rules.
In other words, the senators say they will strangle the agency in its crib unless Congress smothers it first. Said Travis Plunkett, an official with the Consumer Federation of America, in a statement:
The measures that these Senators are demanding were all considered and rejected by Congress last year because they would give big banks extraordinary power over the Bureau's operations and handcuff the only consumer financial cop on the beat that Americans have ever had. Enactment of these measures would virtually guarantee that the CFPB would be a weak and timid agency without the will or ability to curb the kind of financial abuses that caused the nation's worst financial crisis since the Great Depression.So why does this make it likely that Warren will get the job? Because Democrats control the Senate, and not enough of them would consent to the Republican ultimatum to overhaul the CFPB. For their part, Republicans have enough votes in the Senate, which must confirm any nominee to head the CFPB, to filibuster the process. (Forget whatever you learned in high school about needing 51 votes to pass a bill -- when it comes enacting legislation, we now live in an age of minority rule.)
With Republicans barring the door in the Senate, President Obama will have little choice but to name the CFPB director through a "recess appointment" before the bureau opens for business on July 21. As David Dayen notes, the lawmakers' threat eliminates the main obstacle to nominating Warren, which is that the Senate would never confirm her. And again, that threat is now moot since Republicans now refuse to approve anyone.
The latest hubbub over the CFPB reveals that while Republicans fear Warren, their real concern is with the bureau itself, which will inherit consumer protection powers from the Fed, other banking agencies and the FTC. They fought its creation before last year's passage of financial reform legislation. They are now moving in the House to hamstring the bureau. And given an opportunity following next year's national elections, they will undoubtedly move to weaken it in future.
Whether or not Warren is at the CFPB's helm come July, this fight is less about any one individual's ideas on financial regulation than over the idea of regulation itself. That battle will continue, of course. To that end, Republicans have, intentionally or not, given Obama the perfect excuse to give her the job. He should take it.
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