When Representative Luis Gutiérrez, a liberal member of the House Financial Services Committee, heard over the weekend that President Obama had nominated Richard Cordray to head the Consumer Financial Protection Bureau, he wasn’t sure what to think. Not because he was unsure about Cordray’s record—Gutiérrez just didn’t know who he was.
“I am not familiar with Attorney General Richard Cordray, but a quick Google search was very reassuring,” Gutiérrez said in a statement Monday. “He is the type of strong, experienced leader we need to get the agency fully up and running.”
Cordray may have a very low national profile, but in Ohio—where he’s been active in Democratic politics since the early ’90s, and served as state attorney general for two years beginning in 2009—he’s much more of a known commodity.
Since the economic crisis in 2008, Ohio has been plagued with high foreclosure rates. One out of every 608 homes in the state is in foreclosure, and in the Cleveland area, foreclosures have tripled since 1998. The problem was exacerbated by mass “robo-signing” fraud by big banks in the aftermath of the collapse—banks were routinely foreclosing on homes without the proper paperwork or legal documentation.
Cordray quickly stepped in, and last fall was the first state attorney general to sue a mortgage lender over foreclosure fraud. He targeted GMAC Mortgage and Ally Financial, the parent company, and immediately demanded to meet with other top lenders in the state, including Bank of America, JPMorgan, Citibank and Wells Fargo.
The White House reaction to the emerging robo-signing scandal was rather cautious at the time. “We are looking at their process in order to determine their compliance with the law,” then–White House Press Secretary Robert Gibbs said. “Obviously, they have certain requirements under the law that have to be met, and if they're not meeting those requirements they certainly face fines from us and they can face legal actions from homeowners.”
Cordray opened a much more direct line of attack on the industry itself. “What we’re talking about here is not just sloppy paperwork,” he said. “We’re talking about fraud in a court of law. The [foreclosure document signers] were lying under oath, to a judge.” He later characterized the big banks’ foreclosure processes as “a business model built on fraud.”
Only weeks after filing the lawsuit, Cordray lost a statewide election for attorney general to former Senator Mike DeWine, and was quickly picked by Warren to head the CFPB’s enforcement bureau. But his aggressive work combating foreclosure fraud wasn’t the only time Cordray faced off against Wall Street during his short two years as attorney general.
In 2009, Cordray was the lead plantiff in a multibillion-dollar suit against Bank of America over its acquisition of Merrill Lynch during the frenzied economic collapse the previous fall. Cordray sued on behalf of Ohio’s largest public employee funds, claiming that Bank of America had misled them about the poor financial condition of Merrill Lynch prior to the acquisition.
Cordray also reached a settlement on behalf of Ohio schools and pension funds with insurance giant AIG over a “conspiracy” to provide fake commercial casualty insurance quotes. The schools and pension funds received $9 million from AIG in the settlement.
Ed Mierzwinski, the consumer program director for Ohio PIRG, worked frequently with Cordray’s staff during his tenure as attorney general and praised his tough stance against big banks, and added that he was “extremely well-qualified” to head the CFPB. “He recouped a lot of money from Wall Street banks that they looted from Ohio retirees, homeowners, pension funds and Ohio municipalities,” Mierzwinski said.
If confirmed as head of the CFPB—which will be no easy task, given Republican intransigence—Cordray will still be tackling some of the same issues he faced as attorney general, only on a much bigger stage. Foreclosure fraud will no doubt be high on the list, as it continues to plague several areas of the country. “Robo-signing is not even close to over," one Michigan county official told the AP this week. “It's still an epidemic.”
Naturally this has Wall Street a bit concerned over Cordray’s nomination. One attorney who represents the industry said that of all the officials at CFPB now, Cordray “frightens me the most.” Another bank lobbyist said Cordray has “all the hard edge and ambition of [Elizabeth] Warren without the charm.”
But bankers back home have a bit of a different view, indicating that perhaps there’s something to Obama’s claim in the Rose Garden on Monday that Cordray “successfully worked with people across the ideological spectrum, Democrats and Republicans, banks and consumer advocates.”
In an interview with The Nation, Jeffrey Quayle, a senior vice president and general counsel with the Ohio Bankers League, echoed typical industry concerns that the CFPB has “an unlimited budget [with] no checks and balances.” But Quayle said he supports Cordray for the job.
“We haven’t agreed on policy, but he has been available and accessible to debate issues with us,” Quayle said. “He’s proven to be a competent manager.”
Ohioans like Quayle have had a long time to get to know Cordray, who had a twenty-year career in state politics. He was elected to the state house in 1990, and when his seat was redistricted, Cordray ran for Congress in the 1992 elections. He lost a three-way race in a fairly conservative central Ohio district. He later served as the state’s first solicitor general and as the treasurer in Franklin County.
In 1998, during his first, unsuccessful attempt at being elected state attorney general, Cordray told the Columbus Dispatch that his parents inspired him to a life of public service. His father was born blind, and became a program director for a treatment center for the mentally disabled. His mother, who died while Cordray was in college, was a social worker who founded the first foster grandparent program in Ohio that matched elderly foster parents with mentally disabled youths.
Cordray said he spent a considerable amount of his childhood around these programs. “It gave me a leaning towards social services and the Democratic Party before I started to think these kind of things out for myself,” he told the paper. “My parents never ran for political office, but they set an example for public service.”
Running for Congress in a conservative district, Cordray certainly had to make attempts at bipartisanship. During that race he pledged to leave federal office in four years if the federal budget deficit wasn’t halved, and publicly challenged then–Vice President Dan Quayle to make the same pledge during one of Quayle’s campaign stops in Ohio.
While Cordray did embrace a seemingly hawkish stance on the deficit, he had a decidedly uncompromising prescription for addressing the problem. He told the Columbus Dispatch that “billions can be saved by canceling the B-2 bomber, charging market rates for leases of federal lands for timber and mineral production, scaling back the Strategic Defense Initiative and abolishing Radio Free Europe.”