August 19, 2022

Former Ohio Attorney General to Head New Consumer Agency

Mr. Cordray came to national attention for his aggressive investigations of mortgage foreclosure practices while he was attorney general. He is already an employee of the watchdog agency, which starts formal operations on Thursday, as the leader of its enforcement division.

“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 C.F.P.B. and looking out for ordinary people in our financial system,” Mr. Obama said in a written statement. He is expected to formally announce the nomination on Monday.

Congress created the bureau a year ago this week with the enactment of the Dodd-Frank law, which overhauled financial regulations after the credit crisis. The bureau, a centerpiece of the sweeping new law, has since emerged as one of the thorniest topics in Washington and on Wall Street.

Putting a director in place is critical because the agency will not gain the full measure of its powers until the Senate confirms a nominee. The agency can supervise the compliance of banks with existing laws, but the Dodd-Frank financial legislation dictates that it cannot write new rules or supervise other financial companies without a director.

The decision to pass over Ms. Warren — who conceived the bureau, championed its creation and orchestrated its establishment for the last year as a White House adviser — reflects political realities.

Her candidacy was passionately supported by liberal members of Congress and consumer advocacy groups. But she never won the full support of the president or his senior advisers, particularly the Treasury secretary, Timothy F. Geithner, in part because of her independent streak and her outspokenness, which at times put her at odds with the administration.

Also, since last year Mr. Obama has been trying to rebuild relations with the business community after the fights early in his term over health care and financial regulations. Republicans, for their part, had vowed to block her nomination because they said her criticisms of the banking industry showed a lack of fairness.

The financial industry and its lobbyists have worked to delay or dilute several crucial provisions in the Dodd-Frank law, with the consumer bureau chief among them. The industry, along with Congressional Republicans, has hammered away at the bureau’s authority and structure.

While Ms. Warren received the brunt of the scrutiny, Wall Street executives also bristled at the selection of Mr. Cordray to lead the bureau’s enforcement team. Seen as a zealous prosecutor of financial crime, Mr. Cordray is a similarly contentious figure among bankers and lobbyists.

Republicans made it clear on Sunday that they were no more likely to confirm Mr. Cordray than Ms. Warren. Forty-four Republican senators have signed a letter saying they would refuse to vote on any nominee to lead the bureau, demanding instead that the agency replace a single leader with a board of directors.

“Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it,” Senator Richard Shelby of Alabama, the ranking Republican on the banking committee, said in a written statement on Sunday.

The administration has had little success in persuading the Senate to confirm nominees for several other financial regulatory posts, although some recent appointments are pending. Mr. Cordray joins a queue that includes the proposed leaders for two banking regulators, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, and two board members for the Securities and Exchange Commission. About a dozen positions remain vacant.

Mr. Cordray did receive a quick endorsement from Ms. Warren.

“Rich has always had my strong support because he is tough and he is smart — and that’s exactly the combination this new agency needs,” she said in a statement on Sunday. “His work and commitment have made it clear that he will make a stellar director.”

Some of Ms. Warren’s supporters also gave him a reluctant thumbs-up.

“Elizabeth Warren was the best qualified to lead this bureau that she conceived — and we imagine Richard Cordray would agree,” said Stephanie Taylor, a consumer advocate who collected 350,000 signatures on a petition calling for the president to nominate Ms. Warren. “That said, Rich Cordray has been a strong ally of Elizabeth Warren’s, and we hope he will continue her legacy of holding Wall Street accountable.”

Jackie Calmes and Carl Hulse contributed reporting from Washington. Ben Protess contributed from New York.

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