In War over CFPB, Democrats See Political Advantage

By Davidson, Kate | American Banker, December 9, 2011 | Go to article overview

In War over CFPB, Democrats See Political Advantage


Davidson, Kate, American Banker


Byline: Kate Davidson

WASHINGTON a Just seven months ago, Democrats appeared to be boxed in, unable to confirm a leader to the Consumer Financial Protection Bureau without agreeing to demands from Senate Republicans to overhaul the agency's structure.

While they are still unable to install a director for the agency, the Democrats now appear to be using the stand-off to their political advantage. In an all-out media offensive led by the Obama administration, the Democrats have successfully raised the CFPB's profile and put Republicans on the defensive for the first time since the agency's creation. The issue now appears poised to be part of the 2012 election campaign if Democrats can keep up the pressure.

"Democrats can't change Republican votes on the issue, probably, but they can exact a political price and push their election year theme that the GOP is for the rich and they are for the middle class," said Larry Sabato, the director of the University of Virginia's Center for Politics.

The showdown over the director came to a head Thursday, when the Senate rejected a motion to hold an up-or-down vote on Cordray's confirmation.

After the vote, Democrats launched a media blitz with President Obama scheduling an impromptu press conference to discuss the issue. Congressional Democrats, meanwhile, immediately filled reporters' in-boxes with statements expressing outrage over what they claimed was Republican obstructionism.

For an issue that has captivated the financial services world but few others, the flurry of activity appeared to work. On Twitter, which is usually dominated with news about the latest celebrity divorce, the topics "CFPB," "Richard Cordray," and "Senate GOP" were suddenly trending a a term that describes the most popular keywords used on the service.

Aside from some Republican lawmakers attempting to explain their vote, many of those on Twitter were expressing outrage over the vote.

The episode is likely to reinforce Democrats' notion that the issue is a political winner for them, allowing them to score points with their base by standing firm on Cordray while portraying Republicans as too close to Wall Street.

The question remains, however, whether Democrats will be able to successfully keep up the pressure and make it resonate with voters.

Some advocates of the CFPB wondered privately why it took the administration so long to embrace the issue, especially when polls indicate broad support for the bureau from a majority of Americans, including Republicans and independents.

They certainly appear to be trying to make up for lost time.

Last week, Treasury Secretary Tim Geithner held a press conference at the bureau's headquarters, calling on Congress to act quickly to confirm a director and rebuffing the notion that the administration should cave to Republican demands. The White House released a report Sunday on the lack of a director and its effect on nonbank supervision, saying the failure to confirm an agency director left servicemembers and the elderly, in particular, in danger. Administration officials held briefings and gave interviews this week to local media in seven states that were home to Republican incumbents.

After the vote failed on Thursday, President Obama vowed to keep making the Cordray vote a key issue into the 2012 election unless the GOP reverses course.

"I just want to send a message to the Senate: We are not giving up on this," Obama said. "We're going to keep on going at it. We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers being protected by unscrupulous financial operators. And we're going to keep on pushing on this issue."

Asked whether he may try to use his recess appointment powers, Obama said, "we're going to look at all our options."

The more likely alternative, industry observers said, is that the Senate will continue to hold votes on the motion to consider the nomination, forcing the Republicans to go on record against the CFPB again and again. …

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