CFPB on hold as Obama's choice of leader is vetoed

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The Independent Online

The new US regulator designed to stamp out bad lending practices and ban the kinds of subprime mortgages that infected the financial system could be paralysed for months, after Republicans rejected President Barack Obama's nominee to run the agency.

The White House nominated Richard Cordray, a former Ohio Attorney General, as director of the Consumer Financial Protection Bureau (CFPB), but Republican senators said they would block any candidate until the agency's powers are watered down.

Mr Obama decided on Sunday not to nominate Elizabeth Warren, the Harvard bankruptcy professor who came up with the idea for the CFPB, in the hope of avoiding a showdown in Congress. Ms Warren is a strident critic of Wall Street who had clashed with Republican lawmakers.

Liberal groups reacted with disappointment, though the AFL-CIO union's president noted that Mr Cordray had a record of fighting Wall Street on behalf of consumers. Ms Warren said Mr Cordray was a "stellar" choice. "I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis – and the recession and job losses that it sparked – began one lousy mortgage at a time."

The CFPB cannot begin large parts of its work, including enforcing its rules, until its first director is confirmed.

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