Consumer bureau chief Richard Cordray testifies on Hill: Has he charmed the GOP?

If ever there were a man in the hot seat, it would be Richard Cordray, President Obama's recess appointee to head the controversial new Consumer Financial Protection Bureau. But if Mr. Cordray ever felt the need to wipe sweat from his brow during confrontational hearings on Capitol Hill over the last week, he didn't show it.

Rather, Mr. Cordray appeared to disarm some of the CFPB's congressional critics, avoiding confrontation and adopting an easygoing, forthright demeanor that defused some of the expected fireworks.

Still, it's doubtful his nonconfrontational and civil approach will be enough to overcome deep objections from many Republican lawmakers to the scope of the new bureau's powers. Many want to change the structure of the CFPB, from subjecting its budget to the annual appropriations process to implementing a board of directors, arguing that a struggling economy needs a lighter regulatory touch. And some are still steaming over Mr. Obama's end-run around Senate confirmation of Cordray to the post in December.

Cordray’s testimony before an oversight subcommittee was “good, it wasn’t great," said House Government Oversight Committee Chairman and California Republican Rep. Darrell Issa. "I wish he’d come more prepared with the reality that his tenure might be short because he might not be lawfully appointed.”

Even so, Cordray stands in sharp contrast to Elizabeth Warren, who was tapped by President Obama last year to help set up the bureau. 

When Ms. Warren, a Harvard professor now running for Senate in Massachusetts, came before the committee in May, the hearing was often tense, including a testy exchange with Rep. Trey Gowdy (R) of South Carolina.

Representative Gowdy wanted to know if consumers had a responsibility to educate themselves on financial topics. Warren refused to give a yes or no answer on the subject. Gowdy, exasperated, closed out his questioning with, “Mr. Chairman, I give up.” 

Gowdy lofted a similar question to Cordray when the new CFPB chief appeared before the same committee last week.

Consumers need to be responsible for their own actions, Cordray said. In fact, he had worked to create mandatory financial literacy education for high school students in Ohio. The role of the CFPB, he concluded, was to make sure consumers understood the costs and the risks more fully up front, not to save them from bad decisions.

“Mr. Chairman,” Gowdy said, ending his questioning with a hint of satisfaction, “may the record reflect that Mr. Cordray answered the question.”

Time and again, Cordray leaned on his experience as treasurer and attorney general in Ohio to adroitly handle questions from his Republican interlocutors. He cited improving a small business loan program by simplifying forms and reducing bureaucracy, and discussed prosecuting businesses that, seeking a cost advantage over their competitors, skimped on their property taxes.

The House Oversight Committee’s ranking Democrat, Maryland Rep. Elijah Cummings, thinks public pressure has made Republicans less eager to criticize Cordray. But Cordray’s demeanor has also been a significant factor.

“They tried to make him look like the boogeyman,” Representative Cummings said. “But they couldn’t do it because he came off as very reasonable and basically presented a win-win case for their constituents and for the banking community.”

Among such “win-win” agreements that surfaced in the House hearing, Cordray assented to North Carolina Republican Rep. Patrick McHenry's request for the CFPB to publish an annual regulation agenda similar to that published by the Securities and Exchange Commission.

After an extensive back-and-forth on the subject, Representative McHenry concluded, “You’ve given a great deal of explanation. We appreciate that. And we certainly appreciate the exchange of ideas.”

Instead of targeting Cordray, Congressional Republicans are turning their fire toward the administration that appointed him. McHenry said the Obama administration’s use of recess appointments “jeopardizes the sanctity of the bureau’s operations and is unfair to Mr. Codray.”

Indeed, Cordray’s future, no matter his efficacy at selling the CFPB to Republicans, is by no means assured. 

While that matter will be settled in the courts – and perhaps, in part, at an oversight hearing scheduled for Wednesday – its clear that Cordray has won at least begrudging respect from congressional Republicans.

“Yin and yang,” was how Gowdy compared the pair’s time before the committee. 

“They may wind up being exactly the same kind of directors,” Gowdy said. “But he is much better in the committee. He actually answered the questions, he had a conciliatory nature about him, and she has none of the above.”