Defying Republican opposition, President Barack Obama plans today to name former Ohio attorney general Richard Cordray as head of the Consumer Financial Protection Bureau.
The announcement, leaked to media outlets earlier on Wednesday, was confirmed over Twitter by White House media communications director Dan Pfeiffer. "We can't wait," he wrote, referring to GOP lawmakers' refusal to confirm Cordray to lead the new financial regulator unless Congress agrees to overhaul the bureau.
Pfeiffer said Obama will announce the appointment during a speech on the economy today in a suburb of Cleveland. Obama, who is making confrontation with Republicans in Congress a part of his re-election strategy, has said filling the consumer bureau post is critical to protecting middle-income Americans from "unscrupulous" lenders.
Obama is using a so-called recess appointment to install Cordray, who was nominated in July to become the first director of the CFPB, while Congress remains out of session. That means Cordray may only lead the bureau through 2013. The CFPB, the brainchild of prominent consumer advocate and former Obama adviser Elizabeth Warren, was created in 2010 under the Dodd-Frank financial reform law to protect Americans from financial abuse.
The financial industry strongly opposed forming the agency, and congressional Republicans have since repeatedly vowed to. The Senate in December voted 53-45 to consider Cordray's nomination, short of the 60 votes required to overcome a possible Republican filibuster. Senate Republicans also have used technical procedures to bar the White House from appointing Cordray via recess.
In a speech last month in Osawatomie, Kan., Obama expressed frustration over Senate Republicans blocking Cordray's appointment. Obama said at the time, "Everyday we go without a consumer watchdog is another day when a student, or a senior citizen, or a member of our Armed Forces... could be tricked into a loan that they can't afford -- something that happens all the time."
Top Republicans on Wednesday protested Obama's move to install Cordray at the CFPB. Senate Minority Leader Mitch McConnell, R-Ky., said in a statement:
Although the Senate is not in recess, President Obama, in an unprecedented move, has arrogantly circumvented the American people by 'recess' appointing Richard Cordray as director of the new CFPB. This recess appointment represents a sharp departure from a long-standing precedent that has limited the President to recess appointments only when the Senate is in a recess of 10 days or longer....
The CFPB is poised to be one of the least accountable and most powerful agencies in Washington. Created by the deeply flawed Dodd-Frank law, it is subject to none of the checks that independent agencies normally operate under, and will have an unprecedented reach and control over individual consumer decisions.
By contrast, consumer activists applauded the move. Cordray, a former law professor recruited by Warren to lead the CFPB's enforcement bureau, has a strong consumer protection record. For example, in 2010 BAC), JPMorgan Chase (JPM) and other big banks over their own "robo-signing" activities and sued three major credit agencies on behalf of Ohio pension recicipients who lost money on investments in mortgage securities. Previously, Cordray spent two years as Ohio's state treasurer and four as the treasurer of Franklin County, Ohio.after its subsidiary, GMAC, was found to have illegally rubber-stamped foreclosure documents. He also pressed Bank of America (
David Arkush of Public Citizen, a leading consumer watchdog, said in a statement:
American families need a federal agency that will focus on protecting them, not the big banks. The financial industry went wild in recent years, engaging in a raft of abusive financial practices in areas ranging from mortgages and credit cards to payday loans.
It is about time for the Consumer Financial Protection Bureau to be fully functional. Corday is a promising director, and he is more than ready to get to work.
Still, the fight over naming the CFPB director may not be at an end. McConnell said Cordray's appointment puts the regulator in "uncertain legal territory," suggesting that the battle may now continue in court. Democrats contend the White House has legal authority to make such appointments.