September 23, 2020

DealBook: Wall Street’s Newest Regulator a Longtime Foe

Richard Cordray, President Obama's choice to lead the new Consumer Financial Protection Bureau.Michael Houghton for The New York TimesRichard Cordray, President Obama’s choice to lead the new Consumer Financial Protection Bureau.

Richard Cordray, President Obama’s pick to lead the new Consumer Financial Protection Bureau, is no stranger to Wall Street.

As Ohio’s attorney general during the fallout from the financial crisis, Mr. Cordray undertook a series of prominent lawsuits against big names in the finance world. And in late 2010, after narrowly losing re-election, he came to Washington to spearhead the bureau’s enforcement efforts.

Wall Street was largely silent about the news on Sunday, with few financial trade groups willing to say anything much publicly about the nominee.

“We look forward to a productive opportunity to engage with the new leadership of the C.F.P.B.,” said David H. Stevens, president and chief executive of the Mortgage Bankers Association.

But behind closed doors, some industry officials questioned whether life under Mr. Cordray would be any easier than if Mr. Obama had tapped the consumer advocate Elizabeth Warren to lead the bureau. While Ms. Warren conducted a lengthy charm campaign that led her to meet with bankers from every state and subdue some criticism, Mr. Cordray has been deciding which types of enforcement cases to pursue against the industry.

Here is a look at some of the most prominent cases that made Mr. Cordray, as Ohio’s attorney general, the Midwestern sheriff of Wall Street.

CREDIT RATING AGENCIES

While federal officials issued reports chiding the nation’s top credit rating agencies, Mr. Cordray took them to court. He sued the firms, alleging that they not only awarded top grades to troubled mortgage-backed securities but that they also were “intimately involved in structuring” the investments. The products, according to Mr. Cordray, caused retirement funds for police officers and teachers to lose hundreds of millions of dollars.

“The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today,” he said at the time.

Status: Pending

GMAC

Last fall, Mr. Cordray became one of the first attorneys general to take action in the nationwide investigation of wrongful foreclosures. His target: GMAC Mortgage, the home lending unit of General Motors, a unit of the renamed Ally Financial.

“It’s now becoming clear that fraud, deception and an utter disregard for accuracy are in part to blame for the national foreclosure disaster,” Mr. Cordray said at the time.

Status: Pending

A.I.G.

One of Mr. Cordray’s biggest wins came against the American International Group and its former top executives, whom he accused of accounting fraud. He secured a settlement of about $700 million from the giant insurer and a $115 million deal with its former chief executive, Maurice R. Greenberg.

Status: Settled

BANK OF AMERICA AND MERRILL LYNCH

in 2009, Mr. Cordray led a multistate lawsuit against Bank of America concerning its takeover of Merrill Lynch. Mr. Cordray accused the bank of fraudulently concealing Merrill Lynch’s huge losses around the time of the takeover.

“The amount of shareholder value affected here, negatively, is about as great as has been alleged in any case, ever,” Mr. Cordray said at the time.

Status: Pending

Article source: http://feeds.nytimes.com/click.phdo?i=1672b464117725691fc88e96f45e75db

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