Biden Considering CFPB Director Cordray For Fed’s Vice Chair For Banking Supervision
It appears that for the White House, regulating consumer finance (i.e., complaints about credit card rates) and regulating bank holding companies, shadow banks and hedge funds is more or less the same because moments ago the WSJ reported that President Biden is considering Richard Cordray, the first director of the Consumer Financial Protection Bureau and a longtime acolyte of Elizabeth Warren, to serve as the Fed’s top banking regulator, citing people familiar with the matter.
As she has said previously, Warren likely won’t vote to confirm Fed Chairman Jerome Powell for a second term at the Fed, now it’s clear how Biden managed to secure Warren’s tacit support before officially nominating Powell – whom Warren once denounced as “dangerous” – for a second term. The president was planning to throw her a major bone by nominating her pick to one of the most important regulatory posts in the country.
As we pointed out earlier this month, re-nominating Powell and elevating Lael Brainard to vice chair at the Fed might not have been Warren’s first choice (she would have rather seen Brainard elevated to lead the central bank) but now it’s clear why she held her tongue after the decisions were officially announced by President Biden in the days before the Thanksgiving holiday. WSJ is reporting that the White House is considering longtime Warren acolyte Richard Cordray, the former Ohio AG who was installed by Warren to lead the Consumer Financial Protection Bureau between 2012 and 2017, to serve as the Fed’s all-important vice chair for supervision, a role on the Fed’s board of governors that will allow Cordray – and by extension, Warren – to directly influence regulatory oversight of America’s largest banks.
WSJ adds that if Cordray is nominated and confirmed (not a guarantee given the divided Senate), Cordray would become the most influential overseer of the US banking system, succeeding the Trump-nominated Randal Quarles in the role.
The White House said earlier this month that it would announce nominees for other senior Fed vacancies in early December. Of the remaining openings, the vice chair for supervision role was seen as most important.
At the CFPB, Cordray made “significant changes” to the oversight of consumer finance, a corner of the financial industry that had previously escaped most regulatory scrutiny. The agency tightened underwriting standards for mortgages, required more disclosure on credit-card rates and fees, and introduced federal government oversight of payday lenders. WSJ also noted that Warren and other progressives had quietly pushed Biden to nominate Cordray.
Warren clearly sees the bigger picture: It doesn’t matter to her who is leading the Fed – what matters is having a loyal stooge serving as the most influential banking regulator in the US.
Cordray is currently a top official at the Department of Education, serving as the chief operating officer of Federal Student Aid, overseeing the $1.6 trillion student-loan program. And since he will have virtually no knowledge of what he will be regulating over at the Fed, he should fit right in.
Tue, 11/30/2021 – 10:30