President Barack Obama is making a case for strengthening oversight of the financial industry with his nominations of former prosecutor Mary Jo White to be chairwoman of the Securities and Exchange Commission and Richard Cordray as director of the Consumer Financial Protection Bureau.
“We passed tough reforms to protect consumers in our financial system from the kinds of abuse that nearly brought the economy to its knees,” Obama said in a White House announcement. “But it’s not enough to change the law. We also need cops on the beat to enforce the law.”
The decision to again seek Cordray’s nomination, after using a recess appointment to install him at the CFPB, will almost certainly draw new controversy, but White is being nominated to a post with arguably greater consequence for the financial world.
Now a partner at the law firm Debevoise & Plimpton, White previously served as the U.S. attorney for the Southern District of New York, the geographic center of many financial crimes investigations. She is also known for helping lead the successful prosecutions of the crime boss John Gotti and the terrorists responsible for the 1993 World Trade Center attack.
Several Senate Democrats praised White and predicted swift confirmation.
“Mary Jo White is a fearless, tough-as-nails prosecutor with the knowledge of industry to keep up with the markets’ swift innovation,” said Sen. Charles E. Schumer, D-N.Y. “She will not shy away from enforcing the laws to ensure that markets operate fairly, but her integrity means she will approach all matters without regard to politics.”
“She will easily be confirmed,” Schumer said.
Sen. Carl Levin, D-Mich., called White “an excellent public servant and an able prosecutor.” Levin also said he hoped to hear from her about her commitment to fully implement the Dodd-Frank financial regulatory law (PL 111-203), which was intended to prevent a repeat of the 2008 financial crisis.
Senate Republicans were less vocal, but they did not signal opposition to White’s nomination. That would provide some relief for the administration from the heated criticism it has faced from GOP lawmakers who opposed the Dodd-Frank financial regulatory overhaul (PL 111-203) and fought its implementation since the law was passed in 2010.
“Having an SEC chairman with extensive prosecutorial experience can be a good thing,” said Sen. Charles E. Grassley, R-Iowa, a Finance Committee member who has long been interested in clamping down on financial fraud. “With the Justice Department repeatedly giving large financial institutions a pass on prosecutions, the SEC is the last line of defense for individual investors.”
Advocacy groups in favor of stricter financial regulation gave rave reviews to White.
“Wall Street is a high-crime area, and Mary Jo White brings the right skill set to restore the rule of law on Wall Street,” said Dennis Kelleher, CEO of Better Markets, a public interest organization.
Mary L. Schapiro stepped down as SEC chairwoman in November, and Commissioner Elisse B. Walter has been leading the agency in the interim.
Controversial Consumer Bureau
Cordray, on the other hand, likely faces a tough path to confirmation.
He is currently director of the consumer bureau, which was created by the Dodd-Frank law to serve as a watchdog for people seeking mortgages, credit cards and other financial products.
He was installed in a controversial recess appointment in January 2012, after Senate Republicans promised to block his permanent confirmation absent major changes to the bureau. Under the recess appointment, Cordray would have to step down at the end of this year. Obama is hoping to give him a full five-year term.
“Director Cordray has done a great job, and he still has work to do,” said Senate Banking, Housing and Urban Affairs Chairman Tim Johnson, D-S.D. “It is time to stop playing politics and confirm Director Cordray.”
The liberal Americans for Financial Reform said Cordray has made a difference in his tenure so far. “Consumers are already better off because of the bureau’s enforcement and rulemaking actions in the markets for credit cards, mortgages and student loans, among other financial products,” they said.
In the last Congress, Senate Republicans called for changing the director-led bureau into a five-person agency. They also wanted to make the bureau’s appropriations subject to Congress, rather than have it come from the Federal Reserve.
Republicans will likely renew this demand, and Democrats will reject it — which would slow Cordray’s nomination.
Still, Cordray may ultimately overcome the threat of a GOP-led filibuster against his confirmation. Having recently been re-elected, Obama may be given wider latitude to pick the members of his team. And the financial industry may quietly encourage Republicans to confirm Cordray, who has developed a good working relationship with industry over the last year.
“He’s done a good job navigating the difficult regulatory environment,” said Scott Talbott, senior vice president of public policy for the Financial Services Roundtable.
“As director, Richard Cordray has proven himself to be thoughtful, balanced, open minded, accessible and communicative; attributes which are all critical to effectively leading the CFPB’s mission,” said Mortgage Bankers Association CEO David H. Stevens. “As the housing market continues to recover, we need a steady, consistent voice at the helm, and Director Cordray has demonstrated a willingness and ability to listen and learn.”
Cordray’s confirmation will go to the Senate Banking, Housing and Urban Affairs Committee, whose members include Elizabeth Warren, the Massachusetts Democrat who helped create the CFPB. She ran for the Senate in 2012 after Republicans said they would block her confirmation if she were nominated to head the bureau.