Just three days before the official launch of the Consumer Financial Protection Bureau (CFPB), President Obama has announced that Elizabeth Warren, who has been helping to organize the agency as a Special Advisor to the Secretary of the Treasury, will not be nominated to lead the agency. Warren is widely credited as devising the concept for the federal agency, which will enforce consumer protection laws on products like credit cards, student loans and mortgages. But earlier today Warren wrote in a blog post that the President will announce his intent to nominate her deputy, Richard Cordray, to serve as the Bureau’s first director.
Cordray, who was one of Warren’s first recruits to the agency, has been the assistant director for enforcement. He was previously attorney general for Ohio and Ohio treasurer, and has been praised by Warren for being “smart… tough” and an advocate with “a proven track record of fighting for families.”
While the news may disappoint some progressives who had been pushing for President Obama to nominate Warren to the post, despite pledged Congressional opposition, Cordray will face a challenging — if not insurmountable — battle for confirmation himself. In May, 44 Senators wrote a letter to President Obama (pdf) stating that they would oppose the nomination of anyone to lead the CFPB without structural reforms to the agency. The senators argue that “as presently organized, far too much power will be vested in the CFPB director without any effective checks and balances.”
The CFPB technically opens its doors for business on July 21, 2011, but the agency has been gearing up for almost a year since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, creating a simplified mortgage disclosure form, a consumer complaint process and an Office of Service member Affairs to work with military families. A progress report (pdf) released today shows that nearly 500 full-time staff members have been hired and members of the CFPB have been actively engaging with stakeholders from community banks to large financial institutions to consumers and consumer advocates.
But without a confirmed director, the power of the agency will be diminished. “The agency’s authority over payday lenders, debt collectors and other non-bank financial companies can be challenged,” writes Warren. Given that the announcement of the Cordray nomination is just three days before the official launch of the agency and the expected congressional opposition, the CFPB will almost certainly have to operate for the time being without a permanent director.