Banking Law

Elizabeth Warren has spent some time "reaching out" to bankers, trying to assure them that she's not some wild-eyed Bolshevik out to burn down the banking house. That was all well and good while it lasted. Anyone really interested in reading the early warning signs as to which way the CFPB winds will be blowing once that body is formally launched next summer, however, can get a better idea by paying attention to what Ms. Warren does, not what she says. This past week's appointment of Ohio Attorney General Richard Cordray, who lost his re-election bid last month, as the CFPB's head of "enforcement" tells me that the CFPB is going to be very bank-unfriendly.

Described by Peter Schroeder in The Hill blog as a "vocal bank critic who led the effort on the state level to explore mortgage foreclosure practices," it appears that, like Ms. Warren, Cordray intends to "zero in" on credit cards, and will also be doing his darnedest to stop the crime of residential loan foreclosures, especially in cases where borrowers don't make their loan payments to lenders.

?Those are the areas that affect Americans most,? he said. ?You have to go back to the 1930s to find a parallel, in which government set up such an agency.?

Ah, the good old 1930s, when men were men, women were women, and people not only didn't tell, they were afraid to ask. I wonder if we'll reach the point where the president presents his own version of a FDR-like Supreme Court-packing plan to Congress after the current crop refuses to overturn the CFPB-emasculating laws that will be spewing out of Congress over the next few years?

But back to Cordray.

He has a reputation as a guy who likes to sue lenders, and he's done it often. That plays well with a large chunk of the populace. Bank-hating rarely goes out of style. In that respect, Cordray reminds us of Eliot Mess, only sans hookers, which is a point in Cordray's favor. Also, like Spitzer, he apparently views his stint as an "enforcer" as only a stepping stone to higher political office. He told his hometown newspaper that he intends to run for governor of Ohio in 2014. That means that in order to keep his name in front of the folks back home, he's going to have to put the hammer down on some pretty high-profile defendants over the next few years, and to make certain that he holds plenty of well-attended press conferences to tout his populist street cred.

Our preliminary read: "There will be blood."