Ohio Attorney General Richard Cordray, who lost his reelection bid last month in a Republican sweep of state offices, is the choice of Elizabeth Warren to lead enforcement operations at the Consumer Financial Protection Bureau. The 51-year-old Democrat has a distinguished academic and political résumé. He took an aggressive stance in a lawsuit against Bank of America Corporation over its acquisition of Merrill Lynch & Company, claiming it misled investors over how well Merrill Lynch was doing financially.
The CFPB was Warren's brainchild, and she was appointed special assistant to President Barack Obama to set it up, although she has said she does not want to become the permanent head of the bureau after it becomes operational in July. In her announcement, Warren said:
"For too long, American families who have worked hard, played by the rules, and lived up to their financial obligations have struggled against a large, complex financial system with no cop on the beat to enforce the law. ... Richard Cordray has the vision and experience to help us build a team that ensures every lender in the marketplace is playing by the rules."
The class-action lawsuit against Merrill was kindled because the firm paid out $3.6 billion in executive bonuses just before the purchase by Bank of America was completed in January 2009. It was soon announced that Merrill had lost $15 billion in the final quarter of 2008. In an interview about the suit, filed in September 2009, Cordray said, "The Wall Street executives here and the people running these companies, we believe, you know, engaged in greedy, shoddy, self-serving practices."
In February 2010, U.S. District Court Judge Jed S. Lakoff approved a $150 million settlement between Bank of America and the U.S. Securities and Exchange Commission related to the bank's lack of disclosures. At the time Cordray said:
“We welcome Judge Rakoff’s ruling, which recognizes that Bank of America failed to adequately disclose to its shareholders material information related to the Bank’s acquisition of Merrill Lynch. Today’s decision validates and reinforces the core allegations of our lawsuit against Bank of America.” ...
“Although the SEC did not, we sued not only Bank of America, but also top executives who we believe were personally engaged in violations of the securities laws. ... We will continue to aggressively pursue claims against Bank of America and other individual defendants on behalf of shareholders. We will not rest until Bank of America is held accountable for its wrongs, and until the rights of investors and retirees are vindicated.”
Cordray has also participated in an investigation by some 40 state attorneys-general of mortgage companies over faked documents. In November, he sued GMAC Mortgage LLC and Ally Financial Inc., saying they misled courts in Ohio foreclosure cases.
He said Wednesday that he will stay in the federal job for only one or two years and then will run again for statewide office in Ohio, possibly for attorney general, but more likely for the governorship.
"It's a little premature to say what people will be running for in 2014," he said during a news conference. "A lot of people have kept an interest in me running for governor, and I suppose attorney general would be a possibility. If that were to come to pass, I would give it my best — and, certainly, do think that there will be better years ahead than this year proved to be for my colleagues in the Democratic Party and myself."
Two other appointees will be joining Cordray. Leonard Chanin will head up rule-writing; David Silberman will take the lead on credit-card markets.