Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

Richard Cordray is best choice to head consumer bureau, Obama says

July 18, 2011 | 11:13 am

Cordray Saying middle-class families needed a strong watchdog in Washington, President Obama on Monday nominated former Ohio Atty. Gen. Richard Cordray to head the new Consumer Financial Protection Bureau.

"As Ohio's attorney general, Rich helped recover billions of dollars in things like pension funds on behalf of retirees and stepped up the state's efforts against unscrupulous lending practices," Obama said in making the announcement at the White House.

Cordray, who lost his reelection bid last year, was hired about six months ago to be the head of enforcement for the new agency.

Obama noted that Cordray is a former five-time champion on the "Jeopardy" game show, joking that all his responses at his Senate confirmation hearing would be in the form of a question.

The agency, the centerpiece of last year's Wall Street reform law, starts operations on Thursday and is crucial to preventing the abuses that led to the financial crisis, Obama said in a Rose Garden ceremony.

The law put in place "the strongest consumer protections in history," he said.

"We cut the bureaucracy and put one consumer watchdog in charge with just one job -- looking out for regular people in the financial system," Obama said.

He praised Harvard law professor Elizabeth Warren, who also attended Monday's announcement, for proposing the idea of such an agency in 2007 and for helping to launch it as a special administration advisor.

While many liberals touted her as the best candidate to head the agency, Obama said part of her job was to find the best possible director -- and it was Cordray.

Cordray was one of the most aggressive state officials in taking on the banking and mortgage industries after the financial crisis. And in the eyes of opponents of the agency in Congress and on Wall Street, he’s no better pick to direct the powerful new agency than Warren would have been.

“He was a crusading state attorney general who went after financial firms,’’ said Jaret Seiberg, a financial services policy analyst for MF Global, a major derivatives broker. “The industry has good reason to be suspicious.”

During his short tenure as Ohio attorney general from 2009-10, Cordray initiated several high-profile cases against major financial firms on behalf of the state’s pension funds.

He obtained a $1-billion settlement of a class-action securities suit against American International Group and a $475-million settlement of a class-action securities suit against Bank of America related to its acquisition of Merrill Lynch.

A theme of Cordray’s tenure filling the expired term of his predecessor was “Holding Wall Street Accountable.” He narrowly lost to Republican Mike DeWine.

One financial industry executive, who requested anonymity because the consumer agency will be regulating the industry, said Cordray was not any ideologically different from Warren, who was known for her tough stance against the banking industry.

Most Senate Republicans strongly opposed Warren's nomination to the director's position, which has a five-year term. In May, 44 Senate Republicans -- enough to mount a successful filibuster -- promised to block the nomination of her or anyone else to head the agency unless major changes were made in its structure.

Among the changes they want are replacing the single director with a five-member bipartisan commission.

Obama said Monday he opposed those changes, which he said were being pushed by "an army of lobbyists and lawyers."

"I will fight any efforts to repeal or undermine the important changes that we passed, and we are going to stand up this bureau and make sure it is doing the right thing for middle-class families all across the country," Obama said. "Middle-class families and seniors don't have teams of lawyers from blue-chip law firms. They can't afford to hire a lobbyist to look out for their interests. But they deserve to be treated honestly."

Warren on Monday also blasted Senate Republicans for their strategy.

"Many of them don't like the agency or the ideas that led to its creation," Warren wrote on the Huffington Post. "They lost that fight last summer in a straight-up vote, but they say they will use a filibuster over a director nomination to undercut the agency."

"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," she continued.


Cordray is nominee to head financial protection bureau

Consumer Financial Protection Bureau to open without a director

Senate Republicans vow to block any appointee to head consumer protection bureau

-- Jim Puzzanghera

Photo: President Obama congratulates Richard Cordray on his nomination to head the Consumer Financial Protection Bureau. Credit: Reuters