President Barack Obama took a pragmatic if disappointing step Monday by nominating a former Ohio attorney general to lead the new Consumer Financial Protection Bureau instead of Elizabeth Warren, the Harvard law professor and political lightning rod who helped create the agency. Unfortunately, Senate Republicans show no signs of being so reasonable. They intend to block confirmation of anyone in their effort to weaken the bureau's authority, and the Obama administration should not allow that to happen.
A year ago this week, the consumer protection bureau was created as an integral part of the Dodd-Frank law that strengthened financial regulation in the wake of Wall Street's near-collapse. The bureau will contact more than 100 of the largest financial institutions this week and start examining their books to ensure compliance with the reforms. Warren, who has been hiring staff and organizing the bureau as a special adviser to the president, said in a blog Monday that "the DNA of the new consumer agency is well-established'' and that it will protect consumers by pursuing simplified mortgage disclosure forms, streamlined complaint procedures and clearer explanations of all sorts of financial transactions. After the financial meltdown exposed the consequences of lax regulation, more scrutiny and controls are in the nation's best interests.
Warren was the smartest choice to see them through. Yet as much as consumer groups want Obama to keep backing her and fighting with Republicans, the president kept his focus on the bigger picture by nominating Richard Cordray to run the bureau. The issue of enforcing tougher financial regulations is bigger than one person, and Cordray comes with solid credentials and has been heading the bureau's enforcement division. The bureau needs a director before it can start writing new financial rules and aggressively going after unscrupulous payday lenders and debt collectors. There is no time to waste.
Do not expect Cordray to sail through Senate confirmation. In May, 44 Republican senators, including Florida Sen. Marco Rubio, signed a letter vowing not to vote to confirm any nominee for the job until structural changes are made to the bureau. Sen. Richard Shelby of Alabama, the ranking Republican on the Senate banking committee, repeated that ultimatum over the weekend. Republicans want a board of directors to head the agency instead of one person, but that is a way to neuter the agency's effectiveness and Obama should remain steadfast against such gamesmanship.
Congress has a short memory and a weakness for the banking industry's campaign contributions. The assault on the Dodd-Frank reforms began almost as soon as they were passed, and now its opponents are determined to undermine the agency lawmakers created just a year ago to look out for consumers. Obama has made a significant concession by passing over Warren for a less polarizing figure in Cordray to lead the Consumer Financial Protection Bureau. The Senate should respond in kind and confirm Cordray instead of siding with investment bankers, credit card companies and payday lenders.