Nov 30, 2021 - Politics & Policy

Scoop: GOP warns Biden about Fed pick

Richard Cordray is seen during his 2018 Ohio gubernatorial bid.

Richard Cordray is seen during his 2018 Ohio gubernatorial bid. Photo: Jeff Swensen/Getty Images

Key Republicans are warning President Biden not to nominate Richard Cordray, a progressive and former director of the Consumer Financial Protection Bureau, to be the top banking regulator on the Federal Reserve.

Driving the news: Sen. Pat Toomey (R-Pa.) is indicating the GOP will use a potential Cordray nomination to re-litigate his tenure at the CFBP, an agency devised by Sen. Elizabeth Warren (D-Mass.) and fiercely opposed by most Republicans.

  • “Richard Cordray’s disastrous and divisive tenure at the CFPB raises serious questions about how he might undermine the Fed’s independence and nonpartisan reputation,” Toomey, the ranking member on the Senate Banking Committee, told Axios.
  • “This is the individual who helped Elizabeth Warren stand up an agency so unaccountable the Supreme Court took away its independent status," said Toomey. "I’d hope the White House considers less divisive figures for this role.”
  • “I like Richard. I respect Richard. Richard is to the left of Lenin,” Sen. John Kennedy (R-La.) told the Wall Street Journal. It reported Tuesday that Biden was considering Cordray to be vice chair of supervision at the Fed.
  • The White House did not immediately respond to a request for comment. the president said last week he'd be making a decision about the three remaining open Fed spots in early December.

Why it matters: In a 50-50 Senate, Biden has to consider how Republicans, as well as Democrats, will respond to his nominees.

  • Last week, the president announced his decision to renominate Fed Chair Jerome Powell for a second term and elevate Lael Brainard, currently a Fed governor, to the other vice chair slot.
  • If all Republicans uniformly oppose Cordray, who was confirmed for his CFPB role in 2013 by a 66–34 margin, he could face a difficult confirmation process.
  • Five of the 12 Republicans who supported Cordray in 2013 remain in the Senate. Toomey, who's since tussled with Democratic administrations on bank regulation, voted against him. Sen. Joe Manchin (D-W.Va.), a key centrist, supported him eight years ago.
  • The White House already is on notice Biden’s pick to lead the Office of the Comptroller of the Currency, Saule Omarova, is unlikely to be confirmed after five Democrats indicated they would oppose her, Axios reported last week.

The big picture: With vast powers to regulate how financial institutions allocate capital, the supervisory role at the Fed crucially important to America’s banks.

  • Progressives lawmakers are pressing the Fed to take a more aggressive role in fighting climate change, and want the vice chair to take a leading role in ensuring America’s financial system doesn’t provide capital for carbon intensive investments.

Cordray, a former Ohio attorney general who ran unsuccessfully for governor, is currently an official at the Department of Education.

  • President Obama used a recess appointment to install him as director of the CFPB, an agency established after the 2008 financial crisis to protect consumers from predatory practices. He was later confirmed.

Go deeper: Biden also is considering Sarah Bloom Raskin, a former Fed governor and deputy Treasury secretary, for the position, people familiar with the matter tell Axios.

  • There are additional candidates, too, Bloomberg reported.
Go deeper