U.S. President Barack Obama installed his nominee to head a new consumer watchdog agency on Wednesday, bypassing Senate Republicans, who he said held the appointment "hostage" for almost six months.

He told a crowd in Shaker Heights, Ohio, that he refused to take no for an answer.

"When Congress refuses to act, and as a result hurts our economy and puts our people at risk, then I have a responsibility as president to do what I can without them," Obama said. "I've got an obligation to act on behalf of the American people."

As head of the new Consumer Financial Protection Bureau, Richard Cordray will ensure that Americans will be fairly treated when using U.S. financial services, such as credit cards, mortgages and loans. The agency is also tasked with overseeing the federal financial laws that protect consumers.

Cordray will be "in charge of one thing: looking out for the best interests of American consumers," Obama said.

Obama nominated the former Ohio attorney general last summer. Cordray has support from the majority of the Senate, but Republicans stalled his appointment because they think the consumer agency is too powerful and unaccountable.

To get around this, Obama appointed the consumer watchdog during a Congressional recess, a move which he has the constitutional power to do.

The Senate's top Republican, Mitch McConnell of Kentucky, accused Obama of an unprecedented power grab that "arrogantly circumvented the American people."

Added House Speaker John Boehner: "It's clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward. This action goes beyond the president's authority, and I expect the courts will find the appointment to be illegitimate."

But Obama said the agency was needed to protect consumers in a financial system that has been "stacked against ordinary Americans" for "way too long."

He said the Republicans were trying to "water down" the law which protects people from the kind of abuses that led to the financial crisis.

"Does anybody think that we would be in such a financial mess, the worst since the depression … and the reason was because of too much oversight in the financial industry?" Obama said. "We should not be weakening it … we should be strengthening it." 

With files from The Associated Press