Unless the Obama administration agrees to major reforms to the structure of the new Consumer Financial Protection Bureau Senate Republicans said they will filibuster anyone whom President Obama nominates to run the agency.
In a letter signed by 44 of the Senate's 47 Republicans, the lawmakers wrote that "far too much power will be vested'' in the bureau's director.
The senators want: The bureau run by a board; its budget subject to the normal appropriations process; and a mechanism created to have other financial regulators prevent the agency from enacting regulations that would threaten the safety and soundness of financial institutions.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) said the changes aren't necessary.
"Republicans fought the creation of a strong consumer watchdog from the start, and now they are at it again. The truth is this bureau is already subject to greater checks and balances than any other financial regulator and this is just another attempt by Republicans to delay and derail these critical new protections,'' he said in a statement.
The bureau is supposed to begin operating in July though President Obama hasn't nominated a director. He has selected Elizabeth Warren to set up the bureau, which will be an independent agency housed in the Federal Reserve.
Even before Senate Republicans sent Obama the letter Thursday, strategists on both sides of the aisle thought she would have trouble overcoming a likely GOP-led filibuster and there would not be 60 votes to secure her confirmation.
With the Republicans now promising to filibuster any nominee, that changes the dynamics.
"The nomination was already controversial, and this move adds rocket fuel to the debate. This move means one of two things: legislation to constrain CFPB now gets real traction in both chambers or the president chooses to recess appoint a CFPB director. Or maybe both things happen,'' said John McKechnie, a former senior official of the NCUA who now lobbies on financial services issues.
If President Obama makes an appointment during a congressional recess, that person can serve without being confirmed until the end of the current Congress, which is at the end of 2012.
On Wednesday, a House subcommittee approved, along party lines, bills that would: Have the bureau run by a five-member board rather than a director; allow the bureau's decisions to be overturned by a majority vote of the Financial Stability Oversight Council rather than two thirds; and delay the start up of the bureau until a director is in place.
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