Last week, Senate Republicans filibustered the nomination of former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau. The GOP’s plan to justify their filibuster seems to be portraying the CFPB director as a “czar” — a favorite way for Republicans to deride federal officials they don’t like — and falsely claiming that the position has some obscene amount of power.
For instance, Sen. Orrin Hatch (R-UT) last week said that the CFPB director would be akin to an “almighty god” with no oversight. Senate Minority Leader Mitch McConnell (R-KY) continued this narrative yesterday during an interview with Fox News’ Chris Wallace:
WALLACE: What’s your problem with an agency that would protect consumers from mortgage lenders, from debt collectors and student lenders?
MCCONNELL: Yes, here’s the problem: this new agency answers to no one, absolutely no one — another unelected czar. We’ve got a bunch of those in the White House. We don’t need any more of them. And the only way we can incentivize the administration to change this agency which isn’t subject to oversight by Congress, doesn’t get its money from Congress, answers to literally to no one — it’s one individual who could bring down the banking system in this country if he chose to, has unlimited power. No one has that kind of power.
The GOP may have decided this is a clever line of attack, but that doesn’t make it any more true. For starters, the CFPB was created by an act of Congress, which mandated that the agency have a director. By McConnell’s logic, the head of every cabinet or regulatory agency is “another unelected czar.”
Moreover, it’s simply a lie to say that the CFPB director has unlimited power and is subject to no oversight. As we explained last week, the CFPB, unlike any of the other federal financial system regulators, can have it’s rules struck down by a vote of the Financial Stability Oversight Council (FSOC), a panel composed of the heads of the bank regulatory agencies, the Treasury Secretary, and the Federal Reserve Chairman. No other financial regulator is subject to this sort of check. Theoretically, the FSOC could veto each and every rule that the CFPB makes.
Finally, McConnell has a dim view of the banks in this country if he believes that consumer protection rules would bring the whole banking system down. Implicit in that argument is the belief that banks must rip people off in order to make a profit. McConnell’s rhetoric leads to the conclusion that the GOP not only believes banks must hose consumers to survive, but that Republicans are only too happy to help the banks achieve that end.