The battle over the Consumer Financial Protection Bureau

Republicans are trying to block the appointment of Richard Cordray, seen here swearing in at the beginning of his confirmation hearing in Sept. 2011, as director of the CFPB in preference of a commission; Democrats say it's a fight against consumer protection.

Stacey Vanek Smith: Speaking of deadlock, tomorrow the Senate will vote in the confirmation hearing of Richard Cordray as head of the Consumer Financial Protection Bureau. Cordray is the former Ohio Attorney General. He was picked over Elizabeth Warren to head the CFPB partly because he was thought to be more politically neutral -- but now Republicans say they will block Cordray's nomination anyway.

David Lazarus is the consumer columnist for the L.A. Times. He joins me now. Good morning, David.

David Lazarus: Good morning.

Vanek Smith: So David, what's the problem? Why are Senate Republicans threatening to block Cordray's nomination?

Lazarus: Well they say that they feel that the Consumer Financial Protection Bureau needs more accountability and more transparency, so they want to see some structural changes to it. That's their story. What consumer advocates are saying is these guys basically want to water down the agency and make it friendlier to businesses, and the key change that they want to make is to do away with the director altogether and instead bring in a five-person commission that advocates say would be more easily influenced by industry. It would have Republicans, it would have Democrats -- and as we've seen with the Federal Communications Commission, the Consumer Product Safety Commission -- when you've got a mixture of ideologies on the commission, business has a few more ways of getting their point across.

Vanek Smith: What does this mean for the Consumer Financial Protection Bureau, which is, for those who don't remember, the centerpiece for the 2010 Dodd-Frank financial reform act?

Lazarus: What it means is not all of the things that the agency can do are being done right now. It is doing many of its things: It's overseeing credit cards, it's overseeing mortgages, it's doing that kind of thing. But some of the new things that the agency's appointed to look after, such as payday loans, it cannot do until it has a director in place. And moreover, it's leaderless at the moment; it simply does not have someone running the show. Elizabeth Warren built it up from scratch, and now she's out of the picture. And so until we bring Richard Cordray or whoever to run this thing, well basically, it's not going to get any momentum until a new leadership is in place.

Vanek Smith: And if you don't mind getting your crystal ball out now, David, what do you think is going to happen with this vote?

Lazarus: What we can expect going forward is probably a recess appointment, likely in January. And the president will appoint Cordray then, and then there'll be a whole new fight as the Republicans scream about the fact that the president has circumvented due process, and the president has said these guys are trying to block consumer protection. And once again, the game will continue.

Vanek Smith: David Lazarus is the consumer columnist for the L.A. Times. David, thank you.

Lazarus: Thank you.

About the author

David Lazarus is an American business and consumer columnist for the Los Angeles Times.

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