WASHINGTON – Treasury Secretary Timothy Geithner assured the Senate that President Barack Obama’s nominee for director of Consumer Financial Protection Bureau is “exceptionally qualified” for the position.
At a hearing Thursday morning, the banking committee voted 12-10 in favor of confirming Richard Cordray as first director of the CFPB. Cordray must now garner enough votes from the full Senate floor in order to be confirmed.
Obama himself urged the Senate to confirm Cordray at a morning White House press conference.
Geithner maintains responsibility of the CFPB, which was created with the passing of the Dodd-Frank Wall Street Reform and Protection Act of 2010. Raj Date, who serves as Geithner’s special adviser for the CFPB, oversees the bureau’s day-to-day operations.
Cordray, a 52-year-old Democrat who previously served as attorney general of Ohio, was nominated for director in July. Senate GOP members have complicated his nomination process due to concerns with the CFPB’s structure.
“My colleagues and I stand by our pledge that no nominee to head the CFPB will be confirmed by the U.S. Senate, regardless of party affiliation, without basic changes to the bureau’s structure,” said Sen. Jerry Moran, R-Kan., in a statement Thursday.
Harvard professor Elizabeth Warren, who is now a U.S. Senate candidate in Massachusetts, set up the CFPB and was often mentioned as a possible nominee to head the new bureau. But Obama did not nominate her for the post. Warren served as a special adviser for less than a year.
Before his testimony, Geithner encouraged the Senate Republicans who voted against Cordray’s nomination to “spend time with him.” The government will leave a vast array of banking and financial institutions, including those that offer student and payday loans, outside the scope of regulation if the Senate as a whole opposes Cordray’s confirmation, Geithner said.
Defending oversight
Geithner appeared before the Senate on behalf of the Financial Stability Oversight Council, to review its conclusions and recommendations made in its first annual report.
The FSOC was established in July under Dodd-Frank. Geithner serves as the council’s chairman. Its nine other members include Federal Reserve Chairman Ben Bernanke, Currency Comptroller John Walsh and Securities and Exchange Commission Chairwoman Mary Schapiro.
“We cannot predict the precise threats that may face the financial system,” Geithner wrote in his testimony. “The best way to prepare for this uncertainty is to continue to build the shock absorbers and safeguards that improve the resilience of the financial system.”
While there is disagreement on the council’s effectiveness, Sen. Tim Johnson, D-S.D., believes it is necessary.
“The creation of the FSOC was an important step toward a better understanding of the threats facing our interconnected financial system,” Johnson said at the hearing.
Geithner admitted that the FSOC has adopted a different set of check and balances than what Congress expected. He also cited that U.S. financial institutions have significantly reduced their exposure to risk from the European debt crisis and urged Congress to pass the American Jobs Act.
“If Congress does not act on these tax revisions, what happens to the American economy? Without action, businesses will see taxes go up,” Geithner said. “These are things we have to do in the short-term.”