President Obama has decided to name former Ohio Attorney General Richard Cordray to lead the Consumer Financial Protection Bureau, which is set to launch this week. In doing so he bypassed Elizabeth Warren, the Harvard professor who has been one of the nation’s leading champions for reform on behalf of those ripped off by high credit rates and shady mortgages.
Not to mention the bureau was her idea.
It was Warren’s brainchild to put a “cop on the beat” in the wake of the epic failure by federal regulators who fiddled while the economy tanked in 2008. Warren maneuvered the idea of a consumer watchdog regulator all through the congressional marshes last year as part of the Dodd-Frank Act. She took the heat from the banking industry and members of Congress opposed to the regulation of their favored donors. And yet instead of nominating her last fall, Obama merely made her an “Assistant to the President” and a “Special Advisor” reporting to the Secretary of the Treasury, Timothy Geithner, the banking industry’s coddler-in-chief.
And now Obama is naming Cordray to be the bureau’s leader instead of Warren.
There is no doubt that the extraordinarily talented Mr. Cordray can run it, but he would probably be the first to admit that he is no Elizabeth Warren. A 62-year-old grandmother from Norman, Oklahoma, Warren understands with precision the plight of “middle class families,” does not suffer fools and makes the financial industry quake—arguably a job qualification for this position.
Yet one look at last week’s controversial cover of Bloomberg Business Week may hold clues as to why she was passed over. A picture of Warren is surrounded by cartoon blurbs reflecting the whispering war in the corridors of Washington, DC. The blurbs (though not the internal story) label Warren as a “smug,” “arrogant,” “know-it-all.” Warren, who is a rock star on the stump and speaks to sold-out crowds, is too cool for school. Schooling, that is, in the ways of Washington—where you have to kiss up to the Big Boys in charge and go along to get along.
When I met with both Warren and Cordray earlier this year, it was clear that Warren has been a passionate advocate for the bureau. One glance at her schedule, which she posts online, shows her work day and night to meet with stakeholders throughout the country. She is “wicked smart” as they say in Boston, and her brilliance shines through in her vision for how this bureau can work to help the market by providing consumers with better information and by assisting business to reform confusing financial products and practices that have not served our economy well.
Warren, who was in the Treasury building when we met, is one of the few high-profile women in this field with an office there. The milieu in which she operates is exceedingly male, and both Warren and her bureau have been under siege since the mid-term elections. The banking industry went on the offensive in the newly Republican-controlled House to undo or weaken provisions in Dodd-Frank. These assaults on the legislation include an attempt to subject the bureau’s budget to the political appropriations process and an attempt to dilute its regulatory potential by replacing the position of a single director with a five-member commission sure to delay or destroy regulatory initiatives.