Is Richard Cordray the New Elizabeth Warren?

Sept. 6, 2011 -- Richard Cordray started impressing people in politics when he was still a teenager. It was 1978, and Cordray was just another off-the-street volunteer for Dick Celeste's first campaign for governor of Ohio. The campaign office was a perpetually busy hub packed with young, bright people working on behalf of the Democratic hopeful. Cordray was a tall, reedy young man whose open smile and floppy blond hair made him look even younger than his 19 years.

But unlike most young volunteers, who spend lots of time flirting and socializing, Cordray, now nominated to run the new Consumer Financial Protection Bureau, simply put his head down and worked, remembers Greg Haas, who was a staff member on the campaign.

[Related Article: Warren Praises CFPB as Senate Preps for Battle]

"You get hundreds of volunteers coming through a campaign office, and for any one of them to really stand out the way Rich did is pretty unusual," Haas says. "He just immediately caught your eye as a nice guy who was very smart and had everything going for him."

Years later, Haas served as Cordray's media advisor when Cordray ran for county and statewide offices. The two were friendly, Haas says, but not close. Haas's mother died in 2005. At the funeral home, Haas turned around to see Cordray sitting in the back row.

"We hadn't worked together for years," Haas says. "It was not a campaign stop, and there wasn't any percentage in it. He just spent three hours in a car to be at my mom's funeral because that's the kind of person he is."

Outside Ohio, few people have heard of Richard Cordray. His biggest step onto the national stage came in July, when President Obama nominated Cordray to become the first director of the Consumer Financial Protection Bureau, a new watchdog agency created to protect consumers from fraud and abuse by financial services companies. Cordray currently serves as director of the bureau's enforcement division.

Cordray makes his first appearance before the Senate Banking Committee on Sept. 6. Many expect it will be a testy start to a long, nasty and potentially doomed confirmation process, since Republicans in the Senate have signaled they will oppose anyone President Obama nominates for the job.

Obama did his best to blunt some of that opposition at the press conference in the Rose Garden where he introduced Cordray as his nominee.

"I should also point out that he took this job—which meant being away from his wife and 12-year-old twins back in Ohio—because he believed so deeply in the mission of the bureau," Obama said at a press conference in the Rose Garden, where he introduced Cordray as his nominee.

Cordray's nomination is widely viewed as an attempt at compromise. At first, President Obama tapped Elizabeth Warren, a former Harvard law professor, to create the bureau. Warren was the first person to suggest that a new watchdog agency might be needed to protect consumers and the economy from fraud committed by financial service companies, a stance that won her the approval—and admiration—of many consumer advocates and Democratic Party activists.

But Warren could also be strident, as when she said in a Wall Street Journal editorial in 2010 that "Wall Street CEOs have thrown away customer trust like so much worthless trash."

Such forceful attacks on the banking industry won Warren the fierce enmity of those same Wall Street CEOs, as well as leading Republicans who took the extraordinary step of preventing Congress from going into recess for nearly an entire year to prevent Obama from tapping Warren to become the bureau's first permanent director.

Republicans' anger at Warren bubbled over in May, when Rep. Patrick McHenry (R – NC) accused Warren of lying to Congress.

Obama avoided what could have been a political meltdown by passing Warren over and nominating Cordray instead. Even though both Warren and Cordray made their reputations by fighting for consumers and against banks, Cordray remains far less-known and less controversial than Warren.

And unlike Warren, Cordray enjoys support from Republicans (at least among those who know him).

"We have all worked with Mr. Cordray during his career in Ohio and have the highest regard for his ability to partner and collaborate on the most important issues facing our community," four top Ohio business leaders, who usually support Republicans, wrote in a letter of support for Cordray in July.

Regardless of his skills and bipartisan connections, Cordray still might not prevail. Even if Cordray is a compromise candidate, many observers believe he won't be able to surmount the will of 44 Republican senators, who wrote a letter to President Obama in May saying they wouldn't support anyone to lead the new bureau until Obama agrees to make major changes to the bureau's structure and budget.

"Mr. Cordray's nomination is dead on arrival," Senator Richard Shelby, the ranking Republican on the banking committee, wrote in an editorial in the Wall Street Journal.

Inside Ohio, it's hard to find anyone with a better political pedigree, or a more tortured career path, than Richard Cordray. Widely viewed as a wunderkind early in his career, Cordray struggled through a decade of losing campaigns before finally finding his footing as a champion for taxpayers and consumers. Eventually he won the support of both Democrats and Republicans, a rare feat in today's highly partisan political climate.

"Rich and I didn't agree on a number of policy issues," says Betty Montgomery, a longtime Republican officeholder in Ohio whom Cordray challenged unsuccessfully for attorney general in 1998. "But all that aside, I think he is an honest broker for his position, and he works hard at any job he has. You can't really think poorly of him."

Democrats believe that opposition to Cordray is a cynical move by Republicans eager to thwart President Obama's agenda.

"There is no legitimate reason for not confirming Rich Cordray other than raw politics," Ted Strickland, who served as Ohio's governor from 2007 through this year, said in a recent interview.

Cordray was born in Grove City, Ohio, a suburb of Columbus, in 1959. He attended public schools, and worked at McDonald's for minimum wage. After graduating as co-valedictorian, he accumulated a long list of academic achievements, including graduating summa cum laude from Michigan State, first-class honours in economics from Oxford University, and editing the prestigious law journal at the University of Chicago Law School.

"I don't remember that many students, but he really stood out," says Richard Posner, a legal scholar and a judge on the federal Seventh Circuit Appeals Court, who taught Cordray at the University of Chicago.

Cordray's professional career began on a similarly steep trajectory. He clerked for Supreme Court Justices Byron White and Anthony Kennedy. He even became a five-time Jeopardy! champion, winning $40,303 in a week one week on the popular game show. (He used the money to pay off his law school loans.)

[Related Article: What the Government's New Consumer Watchdog Means for You]

After returning home to central Ohio, Cordray launched a campaign for Ohio House of Representatives seat, winning the race in 1990 by pummeling a six-time Republican incumbent. He served two years in the Ohio statehouse before Republicans used the 1990 Census results to draw new district lines that placed Cordray's Grove City house in a deeply Republican district. At the time it seemed a temporary setback. Cordray immediately ran for Congress.

"He was a bright young man in a hurry," says Montgomery, who was in the Ohio Senate when Cordray served in the House.

Cordray lost the election for Congress. In 1998 he ran for Ohio attorney general. Montgomery crushed him, 62 percent to 38 percent. He ran for U.S. Senate in 2000, coming in third in a four-way primary.

Pretty soon, Cordray had a reputation for biting off more than he could chew.

"Others might call him highly political and ambitious," says Montgomery, but those labels are common for "somebody who's got skills in the public sector."

Even though he lost three races in a row, the years from 1992 to 2002 hardly count as a lost decade for Cordray. He quickly won respect from Democratic Party insiders as a dedicated campaigner. In the race against Montgomery, Cordray raised more money than any other statewide Democratic candidate, Haas says, including ones with much bigger profiles.

That kind of aggressive campaigning is critical in Ohio, a notoriously difficult state for candidates with its eight separate media markets, and disparate populations that span from Appalachia in the south to the Rust Belt in the north and the Corn Belt in the middle.

"I've seen him at chicken dinners with party activists in the most rural county seats," says Mike Brown, a former spokesman for Mike Coleman, mayor of Columbus. Coleman also has run for statewide office in Ohio. "He's willing to go everywhere, an he's willing to work at it."

Meanwhile, Cordray was also enjoying rare success as a lawyer. In 1993 Lee Fisher, Ohio's attorney general at the time, appointed Cordray to be the state's first solicitor general, making Cordray the state's lead attorney in appeals cases before the Ohio and U.S. Supreme Courts.

"It takes a special set of skills to be ready to pivot on a second's notice and answer questions peppered at you by justices who don't care what you opening argument is," says Fisher, who served as Ohio's lieutenant governor from 2007 through this year. "I wanted somebody who was extremely bright and was a very good lawyer. Rich fit that bill."

After a decade of disappointment, Cordray finally began to gain traction as a politician by lowering his sights. Instead of running for Congress or the Senate, he returned home to Columbus and ran for county treasurer in 2002.

Even that was not a safe move, since Republicans had dominated the county's politics for decades.

"Those were tough years" for Democrats in Ohio, Haas says. "Rich ran in times when other, more prominent Democrats were hiding. He was willing to stick his neck out."

Cordray (just barely) won, becoming the first Democrat to hold the job since the 1970s. Considering his future career as a consumer's advocate, the timing turned out to be auspicious. Like many cities, Columbus was being ravaged by predatory mortgages, in which lenders often convinced people who had owned their homes for decades to take out large home equity loans that were loaded with hidden fees and interest charges.

[Related Article: Obama Taps New Consumer Watchdog]

With his background in economics and law, Cordray was able to quickly make sense of the complicated loan contracts and see how they were designed to rip off consumers, says Holly Hollingsworth, who later became Cordray's press secretary.

Meanwhile, his instincts for staying close to the grassroots continued to serve him well. Cordray attended many neighborhood meetings with Mayor Coleman to hear directly from consumers themselves about the problems they faced with their mortgages.

If a homeowner was having trouble with a particularly bad predatory lender, Cordray would make phone calls, knowing that his position as county treasurer gave him access that ordinary citizens didn't have, says Brown.

"He'd show up to these meetings in his Jeep, without any staff, and just hang out, sometimes for three hours," Brown says. "He had absolutely no legal responsibility to be there. He just got it."

In 2006, Cordray ran for state treasurer, and won. Two years later, Cordray won a special election to become Ohio's attorney general, after the previous AG resigned in a sex scandal.

Taking office before the financial crisis hit gave Cordray a chance to establish his bona fides as an advocate for consumers. Corday filed lawsuits against small companies, including fake foreclosure rescue scam operations, as well as major financial powerhouses including Bank of America for allegedly misleading investors, and GMAC for filing forged documents in court that may have helped the company foreclose on homeowners illegally.

He also sued the three major credit rating agencies, Fitch, Moody's and Standard & Poor's, for overstating the value of mortgage-backed investments, earning more pay for themselves and Wall Street firms by deceiving investors.

"In short, the credit rating agencies sold out and sold us out," Cordray said at a press conference in 2009.

But unlike some people who held similar positions, including former New York Attorney General Elliot Spitzer, Cordray was never viewed as a lawsuit-happy pit bull. He reached out to Ohio Supreme Court Chief Justice Tom Moyer, a Republican, working together to create a mediation program to help reduce mortgage lawsuit caseloads in county courts, and help some homeowners keep their homes.

"Rich understands the soft power of an office," says Chris Glaros, who worked under Cordray as assistant attorney general and is now the chief lawyer for the Children's Defense Fund. "He's extremely good at understanding complex problem and finding solutions that are realistic and meaningful, and forging partnerships with people from all different parts of the political spectrum."

Cordray's successes at challenging unscrupulous lenders won him nationwide attention. That came in handy in 2010, when he narrowly lost his re-election campaign to Republican Mike DeWine. Within a month, he was tapped to lead the enforcement division at the Consumer Protection Bureau.

When President Obama announced his nominee to lead the new bureau, in July, he made it clear that Cordray' experience investigating financial firms was his prime qualification.

"Prior to this, as Ohio's attorney general, Rich helped recover billions of dollars in things like pension funds on behalf of retirees, and stepped up the state's efforts against unscrupulous lending practices," Obama said.

It's rare for any politician to receive such widespread respect, especially one who has been in the public eye for two decades. In reporting this story, Credit.com grew so tired of hearing how brilliant and principled Cordray is that we started to almost beg: Isn't there something wrong with this guy?

The only complaint we heard: Rich Cordray prefers nerdy shirts.

"Honest to god, the worst thing I can think of is that he loves those professor-looking shirts with the button-down collars," says Hollingsworth. "I told him they look really bad. He didn't care."

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.

"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?'"

Christopher Maag Credit.com's Reporter, Chris graduated with honors from the Columbia University Graduate School of Journalism, and has reported for a number of publications including The New York Times, TIME magazine and Popular Mechanics.