Richard Cordray, the new head of the Consumer Financial Protection Bureau, is hard at work this week after being appointed by President Barack Obama to lead the nation’s new business watchdog agency.
Obama used a recess appointment to seat Cordray (right) on Jan. 4 and to skirt members of Congress who had blocked his appointment in return for heavy donations from the business interests regulated by the CFPB. The new agency will supervise payday lenders and other firms outside the conventional banking system, many of which specialize in interest rates that were once the province of criminal loan sharks.
The bureau was created by the Dodd-Frank Act to separate consumer protection in financial transactions from the regulators who ensure bank stability. Those regulators had a vested interested in damping consumer complaints that might raise questions about the way they were doing that job, and about a subprime lending sector with close ties to some of the largest U.S. banks.
Cordray, 52, fills a position and leads a bureau created by Harvard Law School Professor Elizabeth Warren (right), who conceived of the bureau as a financial cop for ordinary Americans being gouged in the absence of a middle class law market. Congressional allies of the industries that will be regulated by CFPB succeeded in blocking her appointment.
Warren is now running as a Democrat for the U.S. Senate seat in Massachusetts held by Republican Scott Brown. She originally chose Cordray, a former Ohio attorney general, to run the bureau’s enforcement arm.
