Obama plans media blitz for financial watchdog

Reuters News
Posted: Dec 04, 2011 8:33 PM
Obama plans media blitz for financial watchdog

By Caren Bohan and Dave Clarke

WASHINGTON (Reuters) - President Barack Obama will begin a media campaign this week to seek support for his nomination of banking industry critic Richard Cordray to head a new financial watchdog agency.

The White House strategy will be to try to pressure Senate Republicans to confirm Cordray by making an appeal directly to voters in the home states of those politicians.

"We intend to aggressively take the case for Mr. Cordray's confirmation directly to the American people," White House deputy press secretary Josh Earnest told reporters.

With a Senate vote on Cordray tentatively scheduled for Thursday, Obama and his aides will give a series of media interviews on the nomination of the former Ohio attorney general to head the Consumer Financial Protection Bureau.

Republicans opposed creation of the consumer agency, which was created under the 2010 Dodd-Frank legislation overhauling Wall Street regulation.

Its mission is to protect consumers from practices such as abusive mortgage lending and hidden credit card fees. But Republicans have warned of the risk of regulatory overreach that could make the financial industry less competitive.

They have demanded changes before agreeing to confirm Cordray, who was nominated by Obama in July.

In his former role as attorney general in Ohio, Cordray was known as a leader among state attorneys general in a probe of dubious mortgage foreclosure practices. He lost his re-election bid last year and in December, he worked alongside outspoken consumer advocate Elizabeth Warren to help set up the new consumer agency.


The White House will focus its attention on seven states, including Maine, home to two moderate Republican senators, Olympia Snowe and Susan Collins, and Tennessee, represented by Republican Bob Corker, who sits on the Senate Banking Committee and is up for re-election in 2012.

In addition to Maine and Tennessee, the White House will also target Alaska, Indiana, Iowa, Nevada and Utah.

Earnest said that administration officials would hammer a message on the impact on middle-class families of confirming Cordray and getting the consumer agency fully up and running.

Without a confirmed director in place, there are some constraints on the consumer agency's regulatory powers. For example, it is limited in its ability to regulate non-bank players in the financial system, including so-called "pay-day" lenders, some mortgage lenders, debt collectors and credit reporting agencies.

Earnest said putting in place Obama's selection for the consumer bureau would help protect Americans who are "being gouged by hidden fees and other unscrupulous tactics."

Alabama Senator Richard Shelby said in a statement that it was crucial for the consumer agency and other financial regulators to be accountable and pressed his case for changes to the bureau.

"The CFPB is unaccountable by design. We will continue to fight for accountability from regulators," added Shelby, who is the ranking Republican on the Senate Banking Committee.

The Obama administration on Sunday released a report detailing what it said were regulatory gaps left open by the lack of oversight of non-bank players in the financial arena.

The White House cited a study that said payday lenders, which offer short-term loans to help people cover monthly bills, charge interest rates that can average 400 percent on an annualized basis.

"Our economy and our financial system can't afford a situation in which consumers are left in the dark about the risks they take, particularly when dealing with these non-bank financial institutions," said Brian Deese, deputy director of the White House National Economic Council.

Warren had been considered the leading candidate for the consumer bureau job but was considered a lightening rod for controversy on Wall Street. Obama sidestepped that controversy by picking Cordray, who shared many of Warren's views but is not as high-profile.

Cordray is a close ally of Warren, who left the Obama administration to run for a Senate seat in Massachusetts.

(Reporting by Caren Bohan and Dave Clarke, Editing by Chris Wilson and Philip Barbara)