Ex-Ohio attorney general to lead new consumer bureau

WASHINGTON (CNN) -- President Barack Obama on Monday will nominate Richard Cordray to head the new Consumer Financial Protection Bureau, the White House announced Sunday.

The announcement means Obama has passed over Elizabeth Warren, the firebrand law professor who envisioned the bureau.

• Print

President Obama will nominate Richard Cordray to head the new Consumer Financial Protection Bureau

If confirmed, Cordray's pick sets up formal leadership for the bureau created under the Wall Street reform bill passed last year.

However, many Senate Republicans have vowed to block any nominee to head the bureau, which they argue lacks transparency and accountability.

Warren was staunchly opposed by many business interests as well as members of Congress, and with an election year approaching, it was never clear if Obama would have chosen her for the post.

As an assistant to the president, Warren is currently setting up the bureau until a permanent director is confirmed. She issued a statement supporting the nomination of Cordray, the former Ohio attorney general who currently serves as the chief enforcement officer for the bureau.

Financial advice you can trust

"Rich has always had my strong support because he is tough and he is smart -- and that's exactly the combination this new agency needs," Warren said. "He was one of the first senior leaders I recruited for the agency, and his work and commitment have made it clear that he will make a stellar director."

Cordray currently works as the bureau's Chief Enforcement Officer and he's also served as Ohio's Attorney General,.

In a statement to Cordray's hometown paper, the Columbus Dispatch, Obama said: "Richard Cordray has spent his career advocating for middle class families, from his 10 years as Ohio's Attorney General, to his most recent role as heading up the enforcement division at the (bureau) and looking out for ordinary people in our financial system."

As attorney general, Cordray fought mortgage servicers and multiple servicing companies. He was a strong advocate for the creation of the Consumer Financial Protection Bureau.

The bureau is intended to make basic financial practices such as taking out a mortgage or loan more clear and transparent while ferreting out unfair lending practices.

On Thursday, the bureau launches as an independent agency and can start examining the books of the nation's largest banks to make sure they're abiding by existing laws that protect consumers. The bureau can also make sure that the banks are following credit card laws that crack down on fees and spell out how long it takes to take credit card debt off through minimum payments.

However, until Cordray steps up as the official director, the bureau lacks new powers critical to preventing the next financial crisis -- such as regulating the non-banking firms that originated hundreds of millions of dollars in subprime mortgages during the height of the boom to families who couldn't afford them.

Warren was such an outspoken critic of the nation's big banks that she became a darling of the progressive left. However, she also drew the ire of the financial community and congressional Republicans, who vowed to block any effort to make her the bureau's leader.

It's unclear whether Cordray can be confirmed. All 44 Senate Republicans had said they'd block any director to the bureau unless Congress weakens the bureau's powers and grant more "oversight and transparency," Republicans say. On Sunday afternoon, it sounded as though Republicans planned to stick together and maintain that position.

"Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it," said Sen. Richard Shelby, an Alabama Republican in a statement released Sunday. "No accountability, no confirmation."

Progressive activists had been lobbying the White House to appoint Warren as the chief. Stephanie Taylor, co-founder of Progressive Change Campaign Committee, reiterated that the group's first choice was Warren, while adding that Cordray is a "strong ally" of Warren.

"We hope he will continue her legacy of holding Wall Street accountable," Taylor said.

In his statement to the Columbus Dispatch, Obama thanked Warren "for her work standing up the new agency".

"This agency was Elizabeth's idea, and through sheer force of will, intelligence, and a bottomless well of energy, she will make and continue to make a profound and positive difference for our country," Obama's statement said.

Warren came to Washington from Harvard University, and there is speculation in Democratic circles that she might return to Massachusetts and mount a campaign to challenge Republican Sen. Scott Brown.

While at the bureau, she has refused to address inquiries about her future moves and was unavailable for comment.

-- CNNMoney's Jennifer Liberto contributed to this report.