President Obama nominated Richard Cordray, a former Ohio attorney general and state lawmaker, to run the nascent Consumer Financial Protection Bureau on Sunday. The announcement comes just four days before the CFPB, set up in 2010’s sweeping overhaul of the financial sector, is set to open its doors, and marks the beginning of the end of financial regulatory reform’s foremost political drama.
Cordray’s resume is well suited to the task at the CFPB, an agency responsible for policing consumer products like mortgages and credit cards. As Ohio’s top law enforcement official, he led the charge in a class action lawsuit on behalf of public pension funds against Bank of America over losses incurred after the acquisition of Merrill Lynch. After years in Ohio politics — and a few failed attempts to reach Washington by way of Congress — Cordray, 52, landed a job as assistant director for enforcement at the CFPB when he lost re-election last November. “Richard Cordray has spent his career advocating for middle class families,” Obama said, “and looking out for ordinary people in our financial system.” Of couse, Obama will get more scrutiny for whom he didn’t pick, than for whom he did.
The concept, design, execution and potent political symbolism of the Consumer Financial Protection Bureau was almost exclusively the domain of one person: Elizabeth Warren. Lionized by the left and made out to be Grendel’s mother by some bankers and Republicans in Congress, the Harvard law prof’s plainspoken campaign to bring financial consumer advocacy to Washington was the most widely publicized — and widely comprehensible — element of financial reform. After Democrats passed their overhaul into law, Obama chose Warren to set up the bureau as special adviser. “This agency was Elizabeth’s idea, and through sheer force of will, intelligence, and a bottomless well of energy, she has made, and will continue to make, a profound and positive difference for our country,” Obama said on Sunday.
So, why didn’t he pick her to become director? There are a number of possible explanations, any of which could have been part of Obama’s calculus. One possible factor is the Massachusetts Senate race, where Democrats have struggled to find a strong contender to take on Republican Scott Brown. Warren has already met with top level recruiters and would ignite serious enthusiasm on the left, were she to run. There have also long been rumors of tension between Warren and Treasury Secretary Tim Geithner, the last standing member of Obama’s original economic team and an influential force in the Oval Office. Geithner has said publicly he thinks Warren is well qualified for the job. Warren’s relationship with Republicans in Congress, not to mention a Democrat or two, has been rocky as well, and if her last few appearances to testify are any indication, a confirmation battle for Warren would have been ugly. But it’s unlikely that things would have even gotten that far; Republicans have vowed to block any CFPB nominee without structural changes to the bureau itself — they want to replace the director with a board and claw its funding back into congressional oversight where they can bleed it out — and it remains to be seem if Cordray will get anywhere himself. If Cordray ends up being recess appointed, liberals will wonder aloud why Obama didn’t just push Warren through in the same way.
The President’s reasons might be unknowable, but the implications of the nomination are clear. In order to finish the crucial rule-writing process or police non-bank lenders after opening for business on July 21, the CFPB needs a director. Cordray’s selection, pending tenuous Senate approval, moves the Consumer Financial Protection Bureau closer to carrying out its mission simplifying mortgage documents, calling out deceptive loan practices and so on. Every bit as clear is that while liberals will find Cordray a qualified and appropriate pick, they won’t be satisfied with Obama’s decision to skip over Warren, or his lack of an explanation. “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,” said Stephanie Taylor of the Progressive Change Campaign Committee. “And we imagine Richard Cordray would agree.”
Update: Elizabeth Warren released the following statement Sunday afternoon, offering a full-throated endorsement of Cordray’s nomination and, surely to the interest of Massachusetts political observers, harshly criticizing Senate Republicans:
Last year, when President Obama and Secretary Geithner asked me to help them stand up the consumer bureau, I enthusiastically accepted the position and got to work because I believe firmly that the CFPB can make the consumer finance markets work better for American families – eliminating fine print, making costs, benefits, and risk clearer, and holding those who break the law accountable. In the time since, we have been hard at work building an agency to do just that.
Today, the President announced his intent to nominate Richard Cordray to serve as the first Director of the CFPB. Rich has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear that he can make many important contributions in leading this agency. He will make a stellar director. I am very pleased for Rich and very pleased for the CFPB.
In May, forty-four Republican Senators wrote a letter saying that they will block anyone from serving as CFPB Director. Many of them don’t like either the agency or the ideas that led to its creation. They lost that fight last summer in a straight up vote, but they have said they will use a filibuster over nomination to undercut the agency and its effectiveness.
I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis – and the recession and job losses that it sparked – began one lousy mortgage at a time. I also hope that when those Senators next go home, they ask their constituents how they feel about fine print, about signing contracts with terms that are incomprehensible, and about learning the true costs of a financial transaction only later when fees are piled on or interest rates are reset. I hope they will ask the people in their districts if they are opposed to an agency that is working to make prices clear or if they think budgets should be cut for an agency that is trying to make sure that trillion-dollar banks follow the law. I hope they will ask their constituents if they are opposed to the confirmation of someone who saved $2 billion for retirees, investors, and business owners as Ohio Attorney General and who has worked hard on the front lines fighting against fraudulent foreclosures and abusive lending practices.
Partisanship may be the most important thing in Washington, but in the rest of the country, people expect their public servants to work together to learn from past regulatory failures and to put our energy into solving problems, not scoring political points. In visiting with people and business leaders across the country – including community bankers and credit unions in all 50 states – I see a real eagerness to move forward, to work together to repair a broken credit market. I hope that Republicans in the Senate take notice and stop their fight to preserve a regulatory system that failed us.
Prior to the passage of the Dodd-Frank Act, the President and I fought side by side to make the new agency possible. And, if we need to, I know we will continue to fight side by side, to keep it strong and independent and to make sure it has the tools it needs to serve the American people.