Obama Sidesteps Elizabeth Warren, Picks Richard Cordray to Lead Consumer Financial Protection Bureau

Jul 18, 2011 11:44am

ABC News' Amy Bingham reports:

After a year of planning and defending the new Consumer Financial Protection Bureau, Elizabeth Warren has been tossed out of the running to lead it. President Obama officially announced today that Ohio Attorney General Richard Cordray will instead be his pick to run the agency, which begins operations this Thursday. 

In a Sunday news release, Obama thanked Warren for her “extraordinary work” in standing up the agency that he said was her idea.

Now that she no longer has a shot to lead the CFPB, Warren may heed the cries for her to run for the U.S. Senate. Liberals have been pushing for Warren for months to run against Massachusetts Sen. Scott Brown in a bid for the seat Ted Kenney once held.

She told MSNBC's Andrea Mitchell on Monday that she is considering a possible bid.

"Massachusetts does beckon, in that it's my home," Warren said. "I need to do that thinking from home . . . not from Washington."

Warren, who served as interim director of the CFPB for the past year, has taken considerable heat for the bureau, which is designed to prevent another financial crisis by policing the predatory lending practices that led to the housing bubble and widespread foreclosures.

She weathered two fierce Senate Oversight Committee hearings where she and committee members sparred about everything from the bureau’s authority to ban financial products to when she could leave the hearing. 

But it was unlikely that Warren could have drawn enough support to get beyond a filibuster for her nomination in the U.S. Senate.

“Professor Warren has done an outstanding job at standing up this agency and has been a tremendous asset to us all during the bureau’s first year,” Treasury Secretary Timothy Geithner said in a statement.

In 2010, just after passage of the Dodd-Frank financial regulation act, which officially created the CFPB, Obama named Warren as a special assistant to both the president and the Treasury Department. This type of appointment allowed Warren to bypass a Senate confirmation.

Soon after her appointment as interim director, Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, spoke out against the president’s choice.

“The individual who heads this bureau will be able to make rules, with ultimately no checks and balances, that could have broad reaching implications for the U.S. economy as it relates to accessing credit, social justice and the safety and soundness of the U.S. banking system,” Corker wrote in a letter to the president. “The job is disproportionately reliant on the decisions of one individual with access to large sums of taxpayer monies to carry out the agency agenda."

In May, 44 of the 47 GOP Senators expressed similar concerns. The group sent a letter to the president saying the Senate would not confirm any nominee unless the director position was replaced by a board, in order to diffuse power to more Senate-confirmed positions.  

The 44 senators could now effectively prevent Cordray’s appointment, which they have vowed to do, because Democrats would not be able to overcome a filibuster. 

"I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis – and the recession and job losses that it sparked – began one lousy mortgage at a time,” Warren said Sunday in a statement after the president’s announcement to appoint Cordray.

Warren said Cordray, whom she chose as the CFPB’s chief of enforcement in 2009, “will make a stellar director."

As the Ohio Attorney General Cordray earned a reputation for staunch regulation of banks during the financial crisis. In October 2010, he sued GMAC Mortgage and its parent company, Ally Financial, for what he claimed were fraudulent foreclosure practices.

The lawsuit alleged that the bank  employed “robosigners” who would sign off on as many as 10,000 foreclosure notices per day without verifying the details of the cases.

Cordray, 52,  “has spent his career advocating for middle class families” and “looking out for ordinary people in our financial system,” Obama said in his Sunday statement.

Cordray is a five-time "Jeopardy!" game show champion and was a semifinalist in the 1987 Tournament of Champions, winning a total of more than $45,000. According to the Columbus (Ohio) Dispatch he used his winnings to buy a car, pay taxes and pay off his law school debt.

Cordray earned his master’s degree from Oxford University and his law degree from University of Chicago Law School, where he was the editor of the law review . He has argued seven cases before the U.S. Supreme Court.

Read more about Cordray's nomination HERE.

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