While praising Elizabeth Warren for setting up the Consumer Financial Protection Bureau, Obama tried to avoid a confirmation fight by naming Richard Cordray, hailing him for fighting "unscrupulous lending practices" in Ohio.
But Sunday night, 44 senators led by Minority Leader Mitch McConnell, R-Ky., and Richard Shelby, R-Ala., ranking Republican on the banking committee, vowed to reject Cordray unless Obama agrees to significant changes to the agency's structure and funding.
All Senate confirmations must pass by a two-thirds majority, or 67 votes, so 44 senators is more than enough to block him.
The structural changes the Republicans demand include changing its leadership from a single director to a five-member commission, the Republican senators say.
"Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it," Shelby said.
"No accountability, no confirmation," his statement said.
McConnell spokesman Don Stewart told The Washington Post the White House had not "addressed our concerns about the lack of transparency and accountability."
Obama would like Cordray confirmed before the Senate goes on summer recess in a couple of weeks, the Post said.
Cordray, 52, who in 1987 was a five-time undefeated "Jeopardy!" champion, is currently the agency's enforcement director.
He attended the University of Chicago Law School, where he was editor in chief of its law review. He also clerked for Supreme Court justices Byron White and Anthony Kennedy.
He gained national attention as Ohio's attorney general for filing lawsuits against mortgage lenders accused of shoddy foreclosure practices.
The agency is a hallmark of the Dodd-Frank Wall Street Reform and Consumer Protection Act, created after the 2008 financial crisis to tame Wall Street, prevent taxpayer bailouts and protect consumers.