Cordray Chosen to Lead CFPB: Obama Selects Right Candidate for Wrong Reasons

On Monday, President Obama named Richard Cordray the first head of the newly created Consumer Financial Protection Bureau (CFPB). Cordray, currently the director of the Enforcement Division at the CFPB, made a name for himself as the Midwestern sheriff of Wall Street as Ohio’s Attorney General when he brought several major lawsuits against banks, credit rating agencies, and insurance firms. In a sign that Cordray hasn’t backed down from his policing of financial firms, many industry officials responded coolly to the announcement. This reaction is surprising since the official industry chorus for the past year has been “anyone except Elizabeth Warren.” Warren, of course, is widely credited with conceiving the idea for the new Bureau and has been a lifelong advocate on behalf of consumers. Not only the driving force behind the CFPB’s creation, Warren has spent the last year building the agency to ensure consumers are protected from abusive consumer financial products and incomprehensive financial product disclosures. Cordray’s nomination is widely considered to be the President’s attempt to avoid a contentious nomination process, a likely scenario had Warren been nominated given her unpopularity among Republicans. However, the President’s decision not to nominate Warren is emblematic of why many progressives have been disappointed by his first term. The President—for often defensible reasons—has elevated politics over policy, which means legislation and/or regulations have been watered down while other priorities have been abandoned altogether. Many progressives would prefer the President to take a stand for what he (and we) believe in and fight more aggressively for those principles that defined his candidacy: equality, fairness, and economic opportunity for all working class Americans. Indeed, many feel that had the President better articulated what he stood for when it came to reforming health care or Wall Street, the final laws would be more much more bold and effective. That being said, it is important that a director be in place when the CFPB officially opens on Thursday and a Warren nomination would have made that impossible. Without a director, the CFPB would be perceived as directionless and unable to exercise many of its new powers. With Cordray, the President gets a tough-minded director who is not perceived as a zealot. As other fights proceed, however, the President may not have the luxury of having such an appealing Plan B. When that time comes, the President must begin to put his principles over politics.