The Consumer Financial Protection Bureau was created in the wake of the 2007-2009 financial crisis.
WASHINGTON — Senate Republicans on Friday pledged to block President Barack Obama's choice to lead the consumer finance watchdog until Democrats agree to restructure it, ramping up an expected fight this year over the controversial new bureau.
The group of 43 Republicans, led by minority leader Mitch McConnell of Kentucky and Mike Crapo, an Idaho senator who is the top Republican on the banking committee, said the Consumer Financial Protection Bureau lacks congressional oversight.
Last week, Obama renominated Richard Cordray to lead the bureau. Cordray received a temporary appointment as director last year, but his position expires at the end of 2013.
"As presently organized, the CFPB is insulated from congressional oversight of its actions and its budget," the Republicans said. "Far too much power is vested in the sole CFPB director without any meaningful checks and balances."
The consumer bureau, which was created by the 2010 Dodd-Frank financial oversight law to oversee mortgage lending and other sectors that played a role in the 2007-2009 financial crisis, was controversial before it even opened its doors.
Republicans and business groups have criticized the bureau's broad authority over a wide range of financial products, and they want it to be funded by congressional appropriations rather than through the Federal Reserve.
Republican senators blocked confirmation of a director when the bureau opened in July 2011, saying it should be led by a bipartisan board rather than a single director.
Obama used a procedural maneuver known as a "recess appointment" to install Cordray at the helm in January 2012. But business groups and Republicans pilloried the move because they said Congress was not in recess at the time, instead holding short meetings every few days with only a few lawmakers present.
One day after Obama nominated Cordray for a full term, an appeals court added fuel to the opposition when it ruled that similar recess appointments Obama made to another regulatory body were unconstitutional.
That ruling did not directly involve Cordray, but experts said the same logic could be used to challenge his appointment.
White House spokesman Jay Carney, who was asked about the issue during a briefing for reporters on Friday, said he was not aware of the letter but the bureau is a central component of efforts to crack down on Wall Street misdeeds.
"The establishment of the Consumer Financial Protection Bureau was to make sure that average Americans who do business with and have dealings with financial institutions have somebody in Washington looking out for their interest," Carney said.
Some Republicans and business groups have said they do not oppose Cordray personally, saying he has been accessible and the bureau has tried to incorporate comments from both industry and consumer advocates in its rules.
But the senators said "common sense reforms" are needed before they will confirm anyone to lead the bureau.
In addition to changing the structure and funding of the bureau, the Republican senators repeated calls made in a 2011 letter to allow federal bank regulators to verify that any new CFPB rules would not harm the safety and soundness of banks.
Additional reporting by Roberta Rampton.
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