POLITICIZING CONSUMER PROTECTION
- JULY 20, 2011
Richard Cordray is a junior achievement Elizabeth Warren.
- In the small favors department, President Obama did not nominate banking scourge Elizabeth Warren to run the new Consumer Financial Protection Bureau. Instead on Monday he nominated one of her protégés, former Ohio Attorney General Richard Cordray, whose career sounds like Mrs. Warren without the charm.
Mr. Cordray, the bureau’s current head of enforcement, is a political enforcer in the Eliot Spitzer mold, which is not what the country needs in an ostensibly dispassionate federal regulator. He showed his hostility toward business after becoming AG in 2009 after his predecessor resigned in disgrace, launching an avalanche of litigation.
He’s also tight with the tort bar. A Journal story last year detailed how out-of-state plaintiffs firms contributed $830,000 to the Ohio Democratic Party candidates’ fund in 2007 and 2008, which in turn supported Mr. Cordray’s campaign to the tune of about $2 million. The three law firms Mr. Cordray hired in the rating agencies’ lawsuit all contributed to the Ohio Democratic Party.
In an interview with the Journal last October, Mr. Cordray compared an Ally employee accused of robo-signing to Nazis at Nuremberg who claimed they were merely following orders. In a chat with Bloomberg Television, he labelled the foreclosure practices of big banks “a business model based on fraud.” Good to see a regulator who takes a cool, even-handed look at the evidence. He was one of the first employees Mrs. Warren recruited to the bureau, calling him three days after he was defeated in 2010.
President Obama announcing his nomination of Richard Cordray, right, to head the CFPB
Here’s a scary thought: In February, Mr. Cordray said that once the bureau gained its full powers this month, he would pursue “on a 50-state basis the things I cared most about as a state Attorney General, with a more robust and a more comprehensive authority.” He could also be motivated by the desire he’s expressed in running for Ohio Governor in 2014, and the bureau is a perfect platform to build a narrative for that race by posing as a consumer advocate against big, evil business.
The Cordray nomination is a deliberate affront to senior Banking Committee Republican Richard Shelby, who wants reforms to make the bureau more accountable. He’s vowed to block any nominee until the Administration widens the bureau’s leadership to a five-member board, makes its funding subject to Congressional appropriations, and ensures that any rules the agency makes are consistent with banking safety and soundness.
Mr. Obama must figure that even if Mr. Cordray isn’t confirmed by the Senate, he can be handed a recess appointment. Meantime, Mrs. Warren has populated the bureau with her ideological soulmates who believe that private financial institutions ought to serve political ends as much as they do shareholders.
