President Barack Obama has chosen former Ohio Attorney General Richard Cordray to lead the Consumer Financial Protection Bureau, which opens this week amid continuing political fights about its scope.
Cordray, currently the assistant director for enforcement at the bureau, will be introduced as Obama’s pick tomorrow, according to a White House statement.
“Richard Cordray has spent his career advocating for middle-class families, from his tenure as Ohio’s attorney general to his most recent role as heading up the enforcement division at the CFPB and looking out for ordinary people in our financial system,” Obama said in a statement.
After losing his bid for re-election in November, Cordray was recruited by Elizabeth Warren, the Harvard University professor who developed the idea for the new agency and was appointed by Obama last fall to set it up.
Warren’s prospects for becoming director of the bureau suffered a setback last year when Christopher Dodd, the Connecticut Democrat then in charge of the Senate Banking Committee, said she couldn’t win confirmation.
Instead, Obama named Warren assistant to the president and special adviser to the Treasury secretary. Warren, who is currently on leave, will return to Harvard in the fall, according to a person briefed on her plans.
Warren said Cordray, 52, will make “a stellar director” of the consumer bureau. “Rich has always had my strong support because he is tough and he is smart -- and that’s exactly the combination this new agency needs,” Warren said in a statement.
Cordray previously served as Ohio’s treasurer and a state representative. When he was appointed enforcement chief at the consumer bureau in December, he told The Columbus Dispatch that he was planning to run for governor in 2014.
A onetime law clerk to the U.S. Supreme Court, he has personally argued seven cases before the high court, according to his official biography. He was also a five-time winner on the quiz show “Jeopardy.”
As attorney general, he sued GMAC Mortgage LLC and its corporate parent, Ally Financial Inc., accusing them of using fraudulent affidavits in court cases over foreclosures in Ohio, according to the state’s website. His office also managed litigation against financial firms including American International Group and Bank of America Corp. (BAC)
Gap in Oversight
The consumer bureau, which is to begin formal operations on July 21, was established by the 2010 Dodd-Frank financial- regulatory overhaul to fill what lawmakers said was a gap in oversight of financial products -- such as mortgages and credit cards -- whose abuse contributed to the 2008 credit crisis.
The president’s nomination for bureau director is subject to Senate confirmation. Without a Senate-confirmed leader, the agency cannot assume certain powers conferred by Dodd-Frank, such as the supervision of non-bank firms -- payday lenders and mortgage originators, for instance.
Because of procedural rules, a nomination needs the support of 60 of the 100 senators to be confirmed. In May, 44 Republican senators announced they wouldn’t vote to approve any candidate to run the bureau without changes in its structure.
Senator Mitch McConnell, the Republican leader in the Senate, on Sunday reiterated his opposition to confirming anyone. Senator Richard Shelby, the top Republican on the Senate Banking Committee, insisted that “a few reasonable structural changes” must be made before a director is confirmed.
Richard Hunt, president of the Consumer Bankers Association, said in a statement that Cordray should explain during his confirmation hearings how the bureau will “ensure financial-service companies can continue to provide innovative and competitive products to address consumers’ financial needs.”
Warren struck back at Republicans in her statement, saying that she has seen “a real eagerness to move forward, to work together to repair a broken credit market” in her travels around the country.
“I hope that Republicans in the Senate take notice and stop their fight to preserve a regulatory system that failed us,” Warren said.
Senator Sherrod Brown, a Democrat from Ohio, told The Columbus Dispatch, which first reported news of the nomination, that he “fully” expects the state’s other senator, Rob Portman, would support Cordray. Portman, a Republican, signed the May letter. Jeffrey Sadosky, Portman’s spokesman, did not return an e-mail seeking comment.
Warren, who previously led the congressional watchdog panel overseeing the bailout of U.S. banks, never publicly removed herself from contention for the job, and Democratic activist groups campaigned for her appointment. Stephanie Taylor, co- founder of one of those groups, the Progressive Change Campaign Committee, had argued Warren’s nomination was important to the Democratic political base.
“With her track record of standing up to Wall Street and fighting for consumers, Elizabeth Warren was the best qualified to lead this bureau that she conceived -- and we imagine Richard Cordray would agree,’ Taylor said today in an e-mail. “That said, Rich Cordray has been a strong ally of Elizabeth Warren’s and we hope he will continue her legacy of holding Wall Street accountable.”
Representative Barney Frank, who chaired the House Financial Services Committee when Dodd-Frank was passed, said Obama made “second-best appointment possible.”
Warren’s unpopularity among Republicans was on display most recently at a May 24 House hearing, when she and Representative Patrick McHenry of North Carolina argued over the truthfulness of her previous testimony and even over how long she would remain to answer lawmakers’ questions.
Several potential candidates rejected overtures about become director, including Jennifer Granholm, the former governor of Michigan, and Ted Kaufman, a former Democratic senator from Delaware, people briefed on the search said. Raj Date, the bureau’s assistant director for research, markets and regulations, was also considered for the post, a person briefed on the process said.
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