Obama Nixes Warren, Picks Cordray to Head CFPB

Cordray

With just a few days before it is scheduled to begin patrolling its beat, the Consumer Financial Protection Bureau finally has a director.  Well, a nominee anyway.

President Obama on Sunday chose former Ohio Attorney General Richard Cordray to head the new consumer agency, bowing to Republican pressure to pass over Elizabeth Warren, the fiery Harvard Law professor who has been in charge of setting up the agency for the past several months.

Warren has been a lightning rod for criticism by Republicans in Congress and their patrons in the financial services industry, who say she is too aggressive in her defense of consumers and too harsh in her criticism of banks.

Not a lap dog

Cordray, however, is no shrinking violet.  Nor is he a stranger to the CFPB.  He was named by Warren earlier this year to head the agency's enforcement efforts.

Though he served less than one term as attorney general in Ohio, he was aggressive in pursuing mortgage lenders accused of robo-signing and other questionable practices and was one of the organizers and driving forces behind the 50-state investigation of how big lenders were handling foreclosures.

Notable cases pursued by Cordray's office included:

• A lawsuit charging that GMAC Mortgage used “fraudulent and unfair and deceptive practices” and filed false affidavits to mislead the courts in hundreds of Ohio foreclosure cases;

• A crackdown on fraudulent “foreclosure rescue” scams that prey on troubled homeowners, warning that Ohio would have “zero tolerance for these predators” on his watch;

• A lawsuit against credit rating agencies accusing them of producing “spectacularly misleading” ratings that contributed to the financial meltdown of 2009;

• Warned Bank of America to “be very careful” when it announced plans to resume the foreclosure process in Ohio and other states where it had suspended them following the robo-signing disclosures.

"While I would not presume to speak for all 50 state attorneys general, from my own standpoint, we will want to be very careful in reviewing whatever their revised process purports to be," Cordray said in his October 2010 warning to Bank of America.

Defeated by DeWine

Cordray was elected Ohio's attorney general on November 4, 2008 to fill the remainder of the unexpired term ending January 2011. On November 2, 2010, he lost his bid for re-election to former Lt. Governor and U.S. Senator Mike DeWine, a Republican who made little mention of foreclosure problems in his campaign.

Prior to his election as Ohio Attorney General, Cordray served as the Ohio State Treasurer and as a member of the Ohio House of Representatives and as the first Ohio state solicitor.

Picking Cordray may give Obama some relief from the intransigent opposition Prof. Warren's nomination would have encountered but is still likely to face Republican opposition to Cordray.

Although Democrats control the Senate, Republicans can use procedural measures to block a Cordray confirmation vote.

Republicans and some Democrats have been loudly echoing the banking industry's contention that there is no need for the CFPB and that the free market will enable consumers to avoid being victimized by unregulated financial giants.