Thirteen months after Senate Republicans warned President Obama that a new consumer finance watchdog’s structure gives an overly broad mandate and unchecked powers to its director, that agency is now involved in higher education.

In a letter dated May 2, 2011, the senators wrote that the director of the new Consumer Financial Protection Bureau (CFPB) “will have vast rulemaking, supervisory, investigative and enforcement powers and the authority to regulate any person or business that offers or sells a ‘financial product or service.’

“This authority will extend not just to traditional financial institutions, but also potentially to thousands of entrepreneurs and small businesses,” they added, advising the president that they would not support any nominee to the post absent structural reforms.

Obama last January controversially appointed Richard Cordray, a former Ohio attorney-general, as CFPB director without Senate “advice and consent” -- a “recess appointment” at a time when Congress was officially in session.

On Tuesday Cordray joined Vice President Joe Biden and Education Secretary Arne Duncan at a White House meeting with 10 university and college presidents to discuss ways to keep college costs down and make prices easier to compare for students.

Cordray gave the rationale for the involvement of the CFPB, which was created under the Dodd--Frank Wall Street Reform and Consumer Protection Act, in college education. “Higher education is a critical part of the American dream, as all of you know, but for many students today, it can only be realized through borrowing,” he said. “It’s often the first major financial decision that a student will make.”

CNSNews.com asked Cordray whether, for an agency considered a watchdog of Wall Street and the financial industry, reaching into higher education costs would give weight to concerns that the agency’s powers were overly broad.

“Actually, I don’t think there is anything broad or vague about our powers,” he replied. “These are very specific problems that regular families face across this country -- problems with mortgages, problems with credit card debt, increasingly as we’ve seen today problems with student loan debt,” Cordray continued.

The agency’s involvement in an area not directly related to the banking and financial industry backs up Senate Republicans’ concerns, said Jonathan Graffeo, spokesman for Sen. Richard Shelby (R-AL), the ranking member of the Senate Banking Committee.

“The unchecked authority and virtually unlimited scope of this massive bureaucracy are the reasons that Republicans opposed its creation under Dodd-Frank in the first place,” Graffeo told CNSNews.com in a statement.

In their May 2011 letter, the senators told Obama they not support a nominee to run the CFPB, regardless of party affiliation, until effective checks and balances on the director’s powers were put in place...

Obama did not respond to the Senate Republicans’ request to establish a board to review the director decision and subject it to the appropriations process. Cordray’s January appointment outraged Republicans, and critics including former Attorney General Ed Meese called the president’s action unconstitutional.

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