WASHINGTON — President Obama said Sunday that he would nominate Richard Cordray, the former attorney general of Ohio, to lead the new Consumer Financial Protection Bureau, passing over Elizabeth Warren, the Harvard Law professor who was the driving force behind the agency's creation.
Cordray came to national attention for his aggressive investigations of mortgage-foreclosure practices while he was attorney general. He had already joined the watchdog agency, which starts formal operations on Thursday, as the leader of its enforcement division.
The decision to pass over Warren — who conceived the bureau, championed its creation and orchestrated its establishment for the last year as a White House adviser — reflects political realities.
Her candidacy was passionately supported by liberal members of Congress and consumer advocacy groups. But she never won the full support of the president or his senior advisers, particularly Treasury Secretary Timothy Geithner, in part because of her independence and outspokenness, which at times put her at odds with the administration.
Also, since last year Obama has been trying to rebuild relations with the business community after the fights early in his term over health-care and financial regulations. And Republicans have vowed to block her nomination because they say that her criticisms of the banking industry showed a lack of fairness.
Putting a director in place is critical because the agency will not gain the full measure of its powers until the Senate confirms a nominee. The agency will be able to supervise the compliance of banks with existing laws, but the Dodd-Frank financial legislation that created the agency dictates that it cannot write new rules or supervise other financial companies without a director.
Republicans made clear on Sunday that they were no more likely to confirm Cordray than Warren. Forty-four Republican senators have signed a letter saying they would refuse to vote on any nominee to lead the bureau, demanding instead that Democrats agree to overhaul the agency's management structure to replace a single leader with a board of directors.
"Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it," Sen. Richard Shelby, R-Ala., who is the ranking member on the Banking Committee, said Sunday in a written statement. "No accountability, no confirmation."
Some of Warren's supporters expressed support for Cordray.
"Elizabeth Warren was the best qualified to lead this bureau that she conceived — and we imagine Richard Cordray would agree," said Stephanie Taylor, a consumer advocate who led an online campaign that collected 350,000 signatures on a petition calling for the president to nominate Warren. "That said, Rich Cordray has been a strong ally of Elizabeth Warren's, and we hope he will continue her legacy of holding Wall Street accountable."
Warren plans to return to teaching at Harvard in the fall, an administration official said.
Cordray, 52, joined the consumer bureau in December after narrowly losing a re-election bid for Ohio attorney general to Michael DeWine, a Republican who suggested during the campaign that Cordray was anti-business.
In an interview at the time, Cordray described his new federal job as a layover, saying, "I do expect to be running for office in the next cycle."
After more than a decade in private practice and local political office, Cordray won a special election in 2008 to become Ohio's attorney general and soon started a series of high-profile investigations of financial companies.
He accused the insurance company Marsh & McLennan of publishing fictitious quotes to suppress competition. He accused credit-ratings agencies of overstating the value of mortgage-backed securities, resulting in massive losses for their investors, including Ohio pension funds. He accused Bank of America of acquiring Merrill Lynch without telling investors the full extent of the investment bank's problems.
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