President Barack Obama will use a recess appointment to install Richard Cordray as director of the Consumer Finance Protection Bureau, a new federal watchdog agency that’s the centerpiece of Obama’s financial overhaul legislation, according to a senior administration official.
The president will make the announcement today during a speech in Ohio, Cordray’s home state.
A former Ohio attorney general who worked with Elizabeth Warren to design the bureau, Cordray will take office immediately, according to White House aides and Democratic congressional staffers.
The move trumps the GOP’s strategy of keeping the Senate, currently shut down for its holiday recess, technically in session so Obama can’t use his power to fill vacancies. It also empowers the CFPB to begin enforcing tough new rules against unscrupulous lenders, whom Obama blames for the economic collapse and recession.
However, it all but guarantees an escalation in partisan warfare with Senate Republicans, who warned the president not to make appointments while they are away. Led by Senate Minority Leader Mitch McConnell, all 47 Republican senators signed a letter to the White House threatening to ratchet up opposition to Obama’s picks for important vacancies ranging from federal judgeships to cabinet department officials, that require Senate confirmation.
Ignoring the warning to make recess appointments, they wrote, “would, at the very least, set a dangerous precedent that would most certainly be exploited in future cases” involving Senate confirmation votes and “could needlessly provoke a constitutional conflict between the Senate and the White House.”
Corday’s appointment in particular angered Republicans, who believe the CFPB is too powerful — and who blocked Cordray from taking office to try and wring concessions from the White House to weaken the bureau, which was created as part of the Dodd-Frank Wall Street financial reform bill.
Obama, for his part, has repeatedly suggested he would go to the mat for Cordray and has dialed up public pressure on Republicans, signaling his willingness to fight.
During a surprise Dec. 8 White House press conference, Obama declared it makes “absolutely no sense” for the GOP to block the nomination and blamed Republicans for failing to protect consumers in a down economy. “Everybody says [Cordray] is highly qualified … a bipartisan individual who looks out for the public interest. This individual’s job is to make sure people are protected,” he said.
In Ohio, Cordray, a Democrat, was serving as attorney general when he took on state banks, insurance companies and securities brokers, among others, who played a role in the Wall Street meltdown or who left homeowners “under water” because of complex subprime loans. In just over a year, he won judgments or settlements totaling $2 billion.
Several Ohio Republicans, former colleagues from the corporate legal world and even former political foes think highly of Cordray, who is a five-time champion on the game show “Jeopardy!” and qualified for its Tournament of Champions. He was Phi Beta Kappa in college, graduated from law school with honors and studied economics at Oxford University.
Though Cordray’s credentials are impressive, liberals had hoped Obama would pick Warren, a Harvard Law School professor from Oklahoma, to lead the bureau. Warren’s plainspoken style and fierce advocacy for the middle class against Wall Street made her a folk hero among progressives.