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The consumer watchdog's work will last–for now

Republicans tried to nullify Obama's consumer watchdog. They failed.
Richard Cordray, nominee for director of the Consumer Financial Protection Bureau, testifies at a confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs on March 12, 2013 in Washington, DC. (Photo by T.J. Kirkpatrick...
Richard Cordray, nominee for director of the Consumer Financial Protection Bureau, testifies at a confirmation hearing before the Senate Committee on Banking...

Republicans tried to nullify Obama's consumer watchdog. They failed.

Former Ohio attorney general Richard Cordray was confirmed by the Senate to be the director of the Obama administration's new consumer watchdog, the Consumer Financial Protection Bureau, by a 66-34 vote Tuesday afternoon, ending a nomination battle that has raged for nearly two years.

“We know this agency is here to stay. No more clouds over what it legally is entitled to do. No more attacks that say maybe we’re going to be able to undercut it in this way or weaken it in that way," Massachusetts Democratic Senator Elizabeth Warren told msnbc's Chris Hayes Tuesday evening. "We’ve got a full fledged watchdog. The one we fought for, and [Cordray] is going to be there to fight for us. I love it!”

The last-minute deal reached in the Senate Tuesday means that Democrats will not nuke the filibuster in exchange for votes on several of Obama's executive branch nominees. It also prevents Republicans from destroying a key part of the Obama administration's plan to avert another economic crisis.

"This means that the CFPB will survive in its current form," says Mike Konczal, a fellow with the liberal Roosevelt Institute. "The structure of the CFPB was consciously chosen to make it the best regulator it can be, and the GOP wanted to weaken those structures." Republicans had previously filibustered Cordray, who was nominated in 2011, refusing to confirm anyone as CFPB director without substantial changes to the agency. Cordray was picked after Senate Republicans threatened to block Warren, the first interim director of the bureau, if Obama chose her. (Warren took former Republican Massachusetts Senator Scott Brown's seat as a consolation prize.)

As first envisioned by Warren, the CFPB was meant to prevent the predatory financial practices that helped lead to the economic crisis in 2008. It was created as part of the 2010 Dodd-Frank Wall Street reform bill, and for the most part, Republicans have fought the CFPB from conception to implementation. During the drafting of Dodd Frank, they attempted to weaken the bureau's regulatory powers and independence. After they failed to block the bill, they vowed to filibuster Obama's nominees to head the agency until the administration agreed to structural changes that would essentially defang the new consumer watchdog.

"The GOP didn't just oppose Cordray, but any nominee for director," says Konczal. "In order to get a director, which is crucial to making the CFPB work, there was worry Dodd-Frank would have to be re-litigated or the agency itself compromised." Cordray's term will last five years, well into the next presidential administration.

Republicans wanted to replace the single director with a board, fund the bureau through congressional appropriations rather than the Federal Reserve, make fewer financial institutions subject to the CFPB's authority, and force the CFPB to be more deferential to the very financial institutions it was created to regulate. All of those changes would have made for a weaker agency. The CFPB, by design, also couldn't use the full range of its powers without a director—which meant the GOP filibuster was keeping the agency from doing its job. Republicans would allow the bureau to function only as long as it was rendered powerless to do what it was intended to do.

Last year Obama bypassed Congress by "recess appointing" Cordray at a time when Republicans were holding brief "pro-forma" sessions while most of the chamber was on vacation, a procedural gimmick that was being used precisely to keep Obama from making key executive branch appointments. The appointment helped spark a court battle over whether or not Obama had exceeded his authority by making a recess appointment while the Senate was technically not in recess. While Democrats have used similar procedural gimmicks to block Republican presidents in the past, as with the filibuster, Republicans have deployed them even more frequently in recent years.

Since Obama "recess-appointed" Cordray in January 2012, the CFPB has largely performed as intended, reining in unscrupulous financial institutions seeking to exploit their customers, the sort of firms whose business model is gouging working people out of what little they have.

This January, a federal court ruled that Obama had acted unconstitutionally when he made appointments to the National Labor Relations Board while Republicans were using those procedural gimmicks to prevent the president from making recess appointments. Though that ruling didn't affect Cordray directly, he was appointed at the same time and conservative groups were challenging Cordray's appointment in a separate case.

Cordray's confirmation means that a centerpiece of the Obama administration's regulatory agenda will survive, at least for the near future. Of course, getting rid of the filibuster would also have made Cordray's confirmation possible, and leaving it in place means that eventually, the Senate will be right back where it started.

"Don't be surprised if we are back here in a few months," says Adam Winkler, a law professor at UCLA School of Law. "It is only a matter of time before the GOP starts to put nominees on hold again. Let's keep our fingers crossed that this peace holds out more than a few months."