The Democratic chairman of the Senate Banking Committee said Tuesday that he is talking with the White House about nominating Richard Cordray, who was the first director of the Consumer Financial Protection Bureau, to be the Federal Reserve’s top banking regulator.
Sen. Sherrod Brown, D-Ohio, told CNBC that he’s spoken to the Biden administration about Cordray and others who could serve as the Fed’s vice chair for supervision and fill other vacancies on the central bank’s Board of Governors.
“I know Rich Cordray well. I like him,” Brown said. “I’m talking to the White House about him and a number of other people.”
Brown may prove a close ally to fellow Democrat Cordray in the weeks ahead given their shared affinity for tougher bank regulation and Ohio roots. Born in Columbus, Ohio, Cordray served as the state’s attorney general from 2009 to 2011 and lost the gubernatorial election race to Republican Mike DeWine in 2018.
He’s also a likely favorite of progressive Democrat Sen. Elizabeth Warren, who worked closely with Cordray when the two helped lead the Consumer Financial Protection Bureau.
Richard Cordray, Democratic nominee for governor of Ohio,
Allison Farrand | Bloomberg | Getty Images
During the Obama administration, then-White House advisor Warren named Cordray as her choice to lead the CFPB’s enforcement arm until the president later promoted him to lead the entire organization. Cordray left the CFPB in 2017 after five years as the Trump administration looked for ways to erode the bureau’s influence.
He now works as a top official at the Education Department, where he manages the $1.6 trillion student-loan program. Cordray declined to comment for this story.
Asked to comment, the White House referred CNBC to a statement it released earlier in November. Last week, the administration announced that it would nominate Fed Chairman Jerome Powell for a second term and Fed Governor Lael Brainard to be the central bank’s vice chair, a role distinct from the vice chair for supervision.
“President Biden still has three vacant seats on the Federal Reserve Board of Governors to fill, including the important position of Vice Chair for Supervision,” the administration said on Nov. 22. “The President intends to make those appointments beginning in early December, and is committed to improving the diversity in the Board’s composition.”
The Fed’s vice chair for supervision, a role created in the aftermath of the 2007-09 financial crisis, serves as one of the nation’s top bank watchdogs and is responsible for ensuring the health of the nation’s largest lenders like JPMorgan Chase, Goldman Sachs and Citi. The official monitors banks’ balance sheets, capital reserves and broader systemic risks that could arise in the event of an economic downturn.
Fed Governor Randal Quarles served as the Fed’s first vice chair for supervision until October, when his four-year term expired. His tenure drew criticism from progressives like Brown and Warren, who railed against his efforts to relax banking regulations in the years following the financial crisis.
Cordray, if nominated and confirmed, would likely offer a contrast to Quarles.
As Ohio’s former attorney general, Cordray prosecuted Bank of America in a 2009 suit that alleged that the bank’s executives worked to conceal information about Merrill Lynch’s deteriorating financials ahead of a shareholder vote on their merger.
“Rich Cordray has spent years fighting on behalf of American families,” Warren said in a statement released in May following the Biden’s administration’s decision to name him to the Education Department.
“Rich was a fearless and effective leader at the Consumer Financial Protection Bureau where he held big banks accountable and forced financial institutions to return $12 billion directly to the people they cheated,” she added. “I’m very glad he will get to apply his fearlessness and expertise to protecting student loan borrowers and bringing much needed accountability to the federal student loan program.”
— CNBC’s Ylan Mui contributed to this report.