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The Consumer Financial Protection Bureau’s Director, Richard Cordray

This article was written by in Economy. 14 comments.

As many Presidents of the United States have done, President Obama avoided confrontation with Congress by appointing an individual to direct a government organization while lawmakers were on recess. Yesterday, the President appointed former Ohio attorney general Richard Cordray to the long-delayed position of director of the Consumer Financial Protection Bureau (CFPB). Now that this department has a director, it can move forward in enacting regulations — not just suggestions — for non-bank financial entities.

Lately, the CFPB has been working on simplifying customer agreements for financial accounts. A great example is this redesigned credit card agreements. The new design highlights the important terms of the agreement, describes financial terms in plain language, and helps consumers increase awareness of their obligations and rights. The bureau is currently working on a similar resigned agreement for mortgage contracts.

Richard CordrayWithout a director, none of these recommendations would be required to be enacted by financial firms. Some banks have already taken steps to improve communication, but banks are also regulated by the Federal Reserve. The Fed issued some regulations as part of the Credit CARD Act of 2009, but the regulations do not extend to non-bank financial firms.

The CFPB may face legal challenges from industry groups who insist that the bureau can have no power to issue regulations.

Who is Richard Cordray?

When Richard Cordray was the attorney general in Ohio, and when he was Ohio’s treasurer before assuming the role of attorney general, I would receive marketing emails from him every couple of months. He championed pro-consumer causes and worked to ensure the public had a better understanding of predatory financial arrangements. His emails were directed at the press to help raise issues in the media. For example, he campaigned for closing loopholes that allows payday lenders to practice predatory tactics and he warned consumers of scams related to the Cash for Clunkers program. Cordray lost in his campaign to be re-elected attorney general in Ohio.

Cordray wasn’t without enemies in the banking industry. He filed a lawsuit against Bank of America and its executives in 2009 on behalf of Ohio’s state pension funds related to the acquisition of Merrill Lynch.

Cordray is also a five-time champion on Jeopardy.

In general, judging by his past actions, Cordray appears to be comfortable with a position strongly in opposition with Wall Street interests, which is a change in direction for Washington politicians for as long as I’ve been an adult. Clinton, Bush II, and Obama have all, despite occasional moments of pro-consumer rhetoric, appointed Wall Street insiders to major financial roles in government and pseudo-government agencies.

There is some validity to that philosophy, after all, Wall Street executives have the connections and relationships with other Wall Street executives, and these connections are necessary for the government to operate efficiently with one of the largest driving forces of the American and global economy. The government, however, can’t be expected to issue effective regulations if it needs to stay on Wall Street’s “good side,” however.

It’s a tough balance to manage, and it’s one of the many reasons why I avoid politics.

Photo: Richard Cordray

Published or updated January 5, 2012.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 14 comments… read them below or add one }

avatar 1 Anonymous

I keep a wait-and-see attitude on this news. I hope the clowns in Congress don’t cut the budget/funding to the new Consumer Protection agency. I noted in the past, when the clowns in Congress (bribed by Wall St. campaign donations) voted to cut the $$ funding to certain regulatory agencies that Wall St. & their cronies didn’t like. When an agency’s funding is cut, it’s much harder for them to hire competent regulators to enforce the law – so the clowns in Congress get to kill the agency by cutting its budget/funding. Another concern is that even if Richard Cordray is pro-consumer, he may become the male-version of Brooksley Born at the CFTC. In the 1990’s, Brooksley Born believed derivatives/futures should be regulated, but her ideas were shot down by the Wall St. cronies Larry Summers, Robert Rubin, Alan Greenspan and the rest of the Clinton administration.

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avatar 2 Ceecee

I missed all the news the past few days and I appreciate your info on this. We will watch and see what happens. In the meantime, I have learned to read all of the fine print. I just read my credit card benefits statement yesterday and learned about some things I did not know, one of which I may use in the near future.

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avatar 3 Anonymous

Barrack Hussein Obama did not appoint him while lawmakers were on recess. They are using “pro forma” sessions to avoid going on recess. Hussein most likely broke the law with this appointment and hopefully there will be a lawsuit which invalidates this appointment.

Regulation is the problem not the answer. Remember when Clinton was in office, he didn’t lessen regulation, he regulated that standards had to be lowered for mortgages. That is what eventually led to this mess. Let the free markets be free. Money will start moving, jobs will be everywhere, and prosperity will return to this nation.

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avatar 4 Anonymous

To AFP, you are mis-informed. Check the history books again. The Clinton administration was the big de-regulator. The Glass-Steagall Act was thrown out in the 1990’s during Clinton administration. As a matter of fact, I have been reading books about the financial history of America in the past few decades. I saw a photo of Bill Clinton signing documents celebrating the death of Glass-Steagall. Then in-came the Gramm-Leich (spelling?) Act which de-regulate the banking industry, allowing commercial banks to merge with investment banks. Watch the Oscar-winning documentary “Inside Job” and read the book “13 Bankers” by Simon Johnson and James Kwak to get the complete picture.

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avatar 5 lynn

Anna is correct. Most people don’t remember Clinton’s signature on that document. He was seen as a beneign president because of his antics, but he was lethal. Note when President Obama hit office they rushed through the Obama care package. Hillary couldn’t get it looked at when Clinton was in office. A mess load of confusion was attached to the bill and pressure to enact it was put on.

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avatar 6 Anonymous

I sincerely hope that AFP’s comment is intended as satire, because if it’s serious, it’s troubling the amount of misinformation and misplaced invective s/he has.

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avatar 7 Anonymous

There is some truth to what AFP has to say. This from the Wall Street Journal:

“Mr. Obama said he had used his power to make appointments when the Senate is in recess. But Republicans said the chamber was not in recess, because it had been using sessions, which lasted a few minutes and didn’t conduct any business, to stay technically open during the holiday break…The debate over Mr. Obama’s ability to name Mr. Cordray partly hinges on a 1993 legal brief, in which the Justice Department said that in cases where the Senate was in recess for more than three days, the president had the power to make recess appointments…As recently as 2010, Neal Katyal, then the acting solicitor general, in response to a question from Chief Justice John Roberts, referred to the Justice Department guidance on recess appointments. “I think our office has opined the recess has to be longer than three days,” he said…Mr. Obama’s advisers, led by White House Counsel Kathryn Ruemmler, believe the president’s appointment doesn’t contradict that earlier advice. They argue that the Senate has effectively been in recess since before Christmas, and the pro forma sessions aren’t enough to change that. ”


So, basically, the GOP was holding brief, meaningless sessions in order to prevent an official “recess” and Obama went and made the appointment anyway.

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avatar 8 Anonymous

So much drama with the CFPB. I just wished they were able to put someone in the position without so much fuss!

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avatar 9 eric

Although I liked Warren for it, I knew she would be a long shot with all of this politicking.

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avatar 10 shellye
avatar 11 wylerassociate

I’m going to take a wait & see approach to the CFPB but it’s going to be a brutal fight because the GOP will do anything possible to kill this bureau and say they are defenders of the middle class, etc.

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avatar 12 Anonymous

I’m not sure which is worse. That the republicans were holding meaningless sessions to avoid a technical recess, and thus the ability to make appoints or the fact that Obama is trying to sneak appointments by using a technicality. I tend to think this Obama’s strategy is dishonest, and the the republicans are being equally as dishonest, but only in response.

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avatar 13 Anonymous

I’m an unabashed conservative but I’m not a big fan of gamemanship tactics like this, simply because it sets a precedent for the Democrats to pull the session-extending move the next time they’re in a similar position. Ditto for excessive filibusters. In the end it can come back to bite you.

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avatar 14 qixx

Is the only reason for holding the pro forma sessions to prevent appointments by the President or are there other reasons for doing so?

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