Rent-to-own News - Senate blocks consumer bureau chief

The Senate on Thursday failed to muster the 60 votes needed to confirm President Obama's pick to run the Consumer Financial Protection Bureau, which has become the symbol of the administration's efforts to rein in Wall Street excess.

But Obama said after the vote that he was considering sidestepping Congress with a recess appointment.

The Senate voted 53-45, along partisan lines, falling 7 short of the votes needed to take up the confirmation of former Ohio Attorney General Richard Cordray to be the first director of the bureau.

President Obama said he was undeterred, saying "we're not giving up on this" and vowing to continue to campaign for Cordray to get the job. He said he's considering all his options, which includes a so-called recess appointment of Cordray while Congress isn't in session.

With a recess appointment, Cordray could serve through next December.

All Senate Republicans, except Sen. Scott Brown of Massachusetts, voted against the procedural measure; Olympia Snowe of Maine voted present.

The president nominated Cordray in July, bypassing Elizabeth Warren, the Harvard professor who came up with the idea for the bureau and helped set it up.

At stake are vast new powers the consumer bureau can't wield without a confirmed director. Until there's a confirmed director, the consumer bureau can't regulate financial products from non-banks, including student loan providers, debt collectors, payday lenders and check cashers.

Without a chief, it also can't regulate mortgage originators and servicers, which played a big role in the financial crisis for providing subprime mortgages to families who couldn't afford them in the years leading up to the financial crisis.

Those "toxic" mortgages ended up getting chopped into pieces and bought by the big banks that eventually needed government bailouts to prevent a repeat of a Great Depression, according to Federal Reserve chief Ben Bernanke. Bank of America (BAC, Fortune 500) is still in trouble in large part due to the remains of bad mortgages on its balance sheets.

Without a director, the independent watchdog agency can still regulate mortgages and credit cards that banks issue, a big part of those markets right now. But it can't regulate mortgages and credit cards issued by nonbanks.

Another thing the consumer bureau can't do is declare financial products deceptive or abusive and ban them, according to a Treasury Inspector General report.

The bureau also might not be able to force banks to issue the simpler mortgage disclosure form the bureau has been working on that's due out in 2012.

Republicans say their filibusters has nothing to do with Cordray. They say it's about getting more oversight of the consumer bureau.
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They want three big changes: They want to replace the director with a board, make the bureau ask Congress for money each year, and more power to prevent the bureau from making rules that could threaten the health of financial institutions.

Republicans have complained for months that they've heard no answer from the White House about their proposals. But in a Senate Banking committee hearing in October, Treasury Secretary Tim Geithner basically told them no way. To top of page