Obama’s Pick for Consumer Agency Has Record of Fighting Banks
Mark Seifert recalls being impressed when Richard Cordray, then the Ohio state treasurer, walked into the offices of his Cleveland activist group one day in August 2007.
Seifert’s organization -- Empowering and Strengthening Ohio’s People, or ESOP -- was known for its confrontational tactics, such as the time it gathered at the home of a regional vice president of lender Countrywide Financial Corp. and covered his lawn and flower beds with small plastic “loan” sharks to draw attention to mortgage abuses.
“We are not necessarily safe for the powers-that-be to hang around with,” Seifert, ESOP’s executive director, said in an interview yesterday. “We do direct action. We throw plastic sharks at bankers.”
Far from being aghast, Cordray approved of the tactics and said the small, Cleveland-focused group should expand, Seifert recalled. Before long, it was advising homeowners on how to avoid foreclosure in 10 Ohio offices.
A year later, Cordray became Ohio’s attorney general in a special election and expanded his horizons as well. Using the powers of his new office, he took the biggest banks, including Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc., to court over mortgage servicing practices and losses to state pension funds.
Now, Cordray, 52, may take on banks on a larger stage. President Barack Obama has chosen Cordray as his nominee to run the Consumer Financial Protection Bureau, which was created by the 2010 Dodd-Frank regulatory overhaul.
Call from Warren
Cordray already knows the agency well. After he lost his bid for another term as Ohio attorney general in November, he got a call from Elizabeth Warren, the Obama administration adviser, asking him to head up the bureau’s enforcement work.
In choosing Cordray for the top post, Obama passed over Warren, who has been tasked to set up the new agency and was favored by union and consumer groups to assume the helm when it opens officially July 21. Warren said Cordray would make “a stellar” director.
“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 yesterday.
Republican lawmakers and banking lobbyists have been critical of Warren’s tone and comments since she began working on the launch last fall. Cordray, too, has come in for criticism.
‘Filled With Enemies’
Of all the officials in the consumer agency, Cordray “frightens me the most,” said Jennifer Monty Rieker, an attorney for financial services firms with Cleveland-based Weltman, Weinberg and Ries.
“We have a bureau that is potentially filled with enemies of the banking industry and want to bring us down,” she said at a presentation at the Consumer Bankers Association convention in Orlando on June 13.
Cordray did not respond to requests for comment. Neither did White House spokeswoman Jen Psaki.
Cordray brings a wide-ranging resume to the job: He is a five-time winner on the quiz show “Jeopardy” who also clerked for U.S. Supreme Court Justices Byron White and Anthony Kennedy. He has personally argued seven cases before the high court, according to his official biography.
Cordray attended Michigan State University and Oxford University before getting his law degree from the University of Chicago, where he edited the law review. After two years in the Ohio House, Cordray practiced law privately, while also serving as counsel to the law firm Kirkland & Ellis, until being elected state treasurer in 2007.
At the consumer bureau, Cordray likes to remove his shoes and stroll through the offices in his stocking feet. While in Washington, he has commuted back to Grove City, Ohio, the town southwest of Columbus where his family still resides.
“He was one of the leading attorneys general in addressing subprime mortgage abuses,” Plunkett said in an interview.
In his public comments, Cordray has echoed Warren’s theme that credit markets don’t function well if consumers can’t understand what they are buying. Cordray told the Columbus Dispatch on June 15 that “simplifying and clarifying” financial agreements should be the agency’s goal.
“If we are enforcing the law against the dishonest businesses, the ones that are competing unfairly and illegally with the honest businesses, then that’s better for all concerned,” Cordray told the Dispatch. “It cleans the markets.”
As attorney general and as the consumer bureau’s enforcement chief, Cordray has staked out a position that could bring him into conflict with other banking regulators, notably the Office of the Comptroller of the Currency. The OCC has repeatedly defended its ability to pre-empt, or invalidate, state laws that conflict with federal ones, a policy that often stopped state enforcement of consumer protection rules.
“Dodd-Frank has made an effort to lift pre-emption in a lot of areas,” Cordray said in an interview in December. He predicted “joint enforcement authority with this new bureau and state attorneys general.”
Still, Cordray has held out the possibility that the consumer bureau would work smoothly with other agencies.
“If it’s a good relationship, we will have influence on them and they will have influence on us,” Cordray told a Washington meeting of the National Community Reinvestment Coalition, an activist group, on April 14.
Cordray also told the group that the consumer bureau may hold “investigative hearings” to shed light on trends in consumer finance, and he urged the audience to provide stories and data about what they see on the ground.
“The anecdote is usually the spearhead of the phenomenon,” Cordray said.
After joining the bureau, Cordray began attending meetings dealing with the settlement talks among federal and state officials and major mortgage servicers over lapses in foreclosure paperwork and processes, according to a copy of his calendar for early 2011 obtained by Bloomberg News through a public-records request.
In late March, after press reports surfaced about the consumer bureau’s involvement in mortgage servicing talks, Cordray backed off. He subsequently did not attend a key meeting at the Justice Department on the issue, according to a person briefed on the issue.
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