Personal Finance

Is Richard Cordray the New Elizabeth Warren?

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As Cordray gears up for what may be a contentious Senate confirmation battle, his life remains rooted in the details of day-to-day life that to Beltway journalists qualify as “quaint”, and to nearly everyone else as “normal.” When he’s home from Washington, Cordray drives a grey Pontiac minivan, and goes to events at the public school in Grove City that his twins attend. His wife Peggy teaches law at a local university; his brother Frank works as an orthodontist in Grove City.

“Rich is very well thought-of in Grove City, which is a very Republican town,” says Tom Rutan, a former principal of Grove City high school who worked with Cordray to create a financial literacy curriculum when Cordray was Ohio treasurer. “I’m a Republican, and I’m a fiscal conservative. People ask me how I can support Rich. Because he’s a man of integrity.”

Unfortunately, the big banks that Cordray targeted as Ohio attorney general, together with Republicans in the Senate, argue that the new Consumer Financial Protection Bureau’s solitary director will have too much unchecked power.

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Like other financial regulators, including the Securities and Exchange Commission, the bureau receives most of its budget from fees levied against financial companies. Republicans want to change that, and bring the bureau’s budget under direct Congressional control.

“Over a five-year term, the director will have unfettered authority over thousands of American businesses, not just banks,” Sen. Shelby said in his Wall Street Journal editorial. “While the bureau receives hundreds of millions of dollars of public money annually, the elected representatives of the American people have no say in how it spends this money.”

The fight could become personal and nasty. In a statement about Cordray’s nomination, Senator David Vitter (R – LA) said,  “I’ll continue to fight to do what it takes to stop the president from appointing far-left ideologues.”

Democrats and consumer advocates counter that the bureau’s power is already more checked than any other financial regulator, since the other agencies have veto power over its decisions.

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“False claims about CFPB’s power also ignore the structural oversight and accountability that limit the reach of the CFPB,” Elizabeth Warren, who first proposed the bureau and who helped set it up, testified in Congress in May.

“In addition to being subject to judicial review, the Bureau is the only bank regulator whose rules can be overruled by a council made up of other federal agencies.”

Even Cordray’s supporters concede that despite his intelligence and his ability to make friends across the aisle, he may not be able to overcome Republican opposition to his nomination.

“He’s less of a lightning rod than Elizabeth Warren, and he’s a very nice person,” Posner says. “On the other hand, he was an aggressive attorney general who sued some big companies, so he may just be persona non grata with Wall Street and Republicans. So maybe it’s hopeless.”

The stalemate leaves the consumer bureau with limited power. It will be able to enforce existing laws that, prior to passage of the Dodd-Frank Wall Street reform act, were enforced by other regulatory agencies. But the bureau is barred from finalizing or enforcing any new regulations.

Which means that Corday may be just a pawn in a larger game of chess. The game might not finish until next year, and possibly even later, depending on which party controls the White House, Congress and the Senate after the 2012 election.

Prior to joining the CFPB as chief of the enforcement division, Cordray said he would return to Ohio to run for governor in 2014. He dropped that plan after joining the bureau, and now Jennifer Howard, the bureau’s spokeswoman, says Cordray is committed to serving a full five-year term if he wins confirmation.

However, if he does return to Ohio, he’ll have plenty of friends. Holly Hollingsworth, Cordray’s former press secretary at the Ohio treasurer’s and attorney general offices, was a registered Republican when she interviewed for the job, and her husband worked for Jim Petro, a longtime Republican officeholder in Ohio. (She’s since become an independent.)

“I told Rich’s people that I’m a registered Republican, and my husband works for Jim Petro, and I’ll just be going now,” Hollingsworth says. “They said, ‘Do you understand that doesn’t matter?’”

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This article was updated Sept. 1, 2011, to correct the following errors:

Cordray won a special election to become Attorney General of Ohio; he was not appointed, as the article originally stated.

Prior to Cordray’s CFPB nomination, he announced plans to run for governor in 2014.  When he was nominated, Cordray said he would forgo the race for governor, and instead serve his full term with the CFPB if appointed.  Originally, the article stated he would run for governor even if he was appointed as director of the CFPB, thus cutting short his term with the agency.

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