On July 17, 2011, President Barack Obama chose Richard Cordray, a former Attorney General of Ohio and the current Bureau Director of Enforcement, as his nominee to be the first Director of the Consumer Financial Protection Bureau. Despite recent discontent over the directorship, including the introduction of HR 1315, which seeks to replace the director’s role with a committee, the Senate Banking Committee held a confirmation hearing on Tuesday September 6, 2011, for Richard Cordray’s appointment as the Director of the CFPB. Unfortunately for Mr. Cordray, his confirmation hearing morphed into an opportunity for Republicans to again voice their opposition to a single-director structure with little supervision or check on authority. (See article below.)
In his opening statement, Cordray gave a brief summary of his background and how it prepared him for the position of Director of the CFPB and sought to reassure the Senate Banking Committee that as Director of the CFPB, he would adopt a reasonable approach to regulation and enforcement and be accountable to Congress. His background includes appointment as Franklin County Treasurer, State Treasurer of Ohio and Ohio Attorney General, all of which helped him “develop managerial skills and the knowledge needed to run a financial office and safeguard public funds.” He noted that his experiences also showed him that “there is no such thing as a one-size-fits-all solution” when it comes to solving financial issues. Instead, he has experimented with a variety of different approaches, including new laws requiring financial education for high school students; the creation of the “Save Our Homes” program, which brought businesses and banks together with the community to assist those in financial trouble; courtordered foreclosure mediation; and a “low-interest loan program to help small businesses create jobs and to help farmers obtain needed funds on an affordable basis.” As Ohio attorney general he also utilized the legal system to protect consumers. Specifically, he took on fraud and other scams that targeted the elderly, pursued foreclosure rescue scammers and enforced consumer protection laws against servicers who repeatedly violated the law.
Downplaying enforcement actions the Bureau is expected to initiate, Cordray emphasized that litigation is not always the preferred method of protecting consumers in the financial industry. In particular, Cordray pointed to his early-warning policy, which gave parties a chance to tell their story and resulted in resolving issues without further legal action. Further, Cordray noted that litigation is “very slow, wasteful and needlessly acrimonious” and that he intends to use the entire toolbox of solutions, including “research reports, rulemaking, market guidance, consumer education and empowerment, and the ability to supervise and examine both large banks and many nonbank institutions” in performing his duties as Director of the CFPB. Despite the assortment of tools available, Cordray also made it clear that enforcement will have an important role at the CFPB “[i]f people are ignoring or evading consumer protection laws—and seeking to gain an unfair advantage over their law-abiding competitors.” He also emphasized that he will make it a priority to streamline and decrease the number of regulations under the Bureau’s authority.
It is likely Mr. Cordray’s nomination will be approved by the Democrats on the Senate Banking Committee but will be filibustered by Republicans on the Senate floor.