Barack Obama finally named his nominee to head the new Consumer Financial Protection Bureau. And his name isn’t Elizabeth Warren
The White House press office on Sunday announced that the president had chosen Richard Cordray, the former attorney general of Ohio, to head his new agency, created when he signed the sweeping Dodd-Frank financial-reform package into law last July.
The move will likely hurt the president’s relationships with those who wanted him to push for Warren, a plain-spoken consumer champion who first proposed the new bureau. In the wake of the financial crisis, Warren envisioned an agency that better protected Americans against suspect financial products ranging from mortgages and credit cards to fringe financial services like check-cashing and payday loans.
The president pleased his left flank last summer when he appointed Warren to create this new bureau—but he stopped short of nominating her as its permanent director. Several other names surfaced over the months as possible nominees, including Cordray and also Ted Strickland, the former governor of Ohio, and Jennifer Granholm, former governor of Michigan. But whatever the liberal bonafides of these and other choices, Warren remained the overwhelming pick among consumer champions, especially those involved in the fight against predatory lending.
A permanent director, who would be appointed to a five-year term, needs Senate confirmation. When in May word spread that the president would appoint Warren to head the agency through a recess appointment (the disadvantage of that maneuver being that Warren would serve only for the remainder of Obama’s term, rather than a full five-year stint), Senate Republicans responded by refusing to adjourn for its traditional Memorial Day recess.
“I really like Elizabeth and think she would have been a great choice, but there was always something outsider about her that scared people here [in Washington],” said one high-ranking Obama appointee, herself a woman. Warren taught at Harvard Law and had only gotten involved in politics a few years earlier. “They couldn’t trust her because she wasn’t one of them.”
Yet whether the Senate approves Cordray remains to be seen. These days, it takes 60 votes to get anything done in the Senate—and in May, 44 of the Senate’s 47 Republicans vowed to block any nominee unless the president agreed to a watered-down agency, which stands as Dodd-Frank’s most significant and controversial provision.
A career politician, Cordray served a partial term as Ohio’s attorney general (he filled the term of a fellow Democrat caught up in a sex scandal) before losing a race for reelection in November 2010. The next month, Warren chose him to head up the agency’s enforcement division—in no small part, no doubt, because in his two years as attorney general he aggressively sought punishment of those guilty of foreclosure fraud in his state.
In response to today’s news, Warren issued a statement saying: “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. He was one of the first senior leaders I recruited for the agency, and his work and commitment have made it clear that he will make a stellar director.”
Under Dodd-Frank, the Consumer Financial Protection Bureau goes live this Thursday—one year to the day that the president signed the bill into law. Until the Senate confirms a permanent director, though, the agency’s powers are limited. The bureau can start regulating the country’s largest banks, but it will have limited rule-making authority and won’t have jurisdiction over payday lenders, debt collectors, or other non-bank financial institutions until a permanent director is in place.
Obama will announce his choice at a White House event on Monday.