Richard Cordray
Consumer Financial Protection Bureau architect Elizabeth Warren will not be the new head of the agency when it officially launches this week. President Obama has chosen former Ohio Attorney General Richard Corday, who has a
solid reputation fighting banks on behalf of consumers.
Cordray became Ohio’s attorney general in a special election and expanded his horizons as well. Using the powers of his new office, he took the biggest banks, including Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc., to court over mortgage servicing practices and losses to state pension funds....
In choosing Cordray for the top post, Obama passed over Warren, who has been tasked to set up the new agency and was favored by union and consumer groups to assume the helm when it opens officially July 21. Warren said Cordray would make “a stellar” director.
“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 CFPB and looking out for ordinary people in our financial system,” Obama said in a statement yesterday.
By all accounts, Cordray is well-equipped to deal with the banks, and he has Warren's approval (although, given that she's a fantastic team player, she was unlikely to condemn the choice):
Rich will be a strong leader for this agency. He has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear he can make many important contributions in leading it. Rich is smart, he is tough, and he will make a stellar Director. I am very pleased for him and very pleased for the CFPB.
She does, however, point out the main problem for any nominee to the position: "this agency still has enemies in Washington, D.C. And they have a plan." Meteor Blades makes the same argument. Those enemies are Senate Republicans (backed by House Republicans and pretty much the entire financial industry, excepting community banks), and the plan is to hold hostage any nominee to the position until the agency is essentially gutted. That strategy held true particularly for Warren—they hate and fear her with an intensity that's verging on pathological. But they'll fight Cordray, too.
Because of that, it's both disappointing and completely understandable that Obama chose to bypass Warren. Making this agency the strong consumer watchdog Warren intended and designed it to be is going to take a major fight on the part of the administration and Treasury. In that sense, it would have been reassuring to see the president meeting that fight head on, to know that his commitment to the agency is unwavering and he'd take on all challenges.
But, as Ezra Klein points out, "The question isn’t who you want leading the CFPB for the foreseeable future. It’s who you want spending his or her time being stopped from leading the CFPB for the foreseeable future."
Warren, after all, has another option that she appears to be taking seriously: challenging Scott Brown in the 2012 election. For reasons I’ve outlined here and Bob Kuttner elaborates on here, there’s reason to think she would be a very effective candidate. But if she wants to do that, she can’t spend the next year being blocked from leading the Consumer Financial Protection Bureau. She has to spend at least part of it preparing for her candidacy.
Warren would be a formidable foe to the financial industry at CFPB. But she'd also be a true champion for the middle class in the Senate, a caucus that really needs some beefing up. Hopefully she is seriously considering that run. The country still needs her.