WASHINGTON (Reuters) ? President Barack Obama said on Sunday he will nominate former Ohio Attorney General Richard Cordray to head the new agency charged with protecting consumers from financial fraud and abusive practices on issues such as mortgage lending and credit card fees.
The pick allows Obama to sidestep some of the controversy he would have faced had he nominated Elizabeth Warren, who is credited with conceiving of the idea for the new consumer agency and championed its creation.
But the president is still likely to face a big fight with Republicans on the nomination of Cordray, who is a close Warren ally and whose selection will require Senate confirmation.
Though Obama's fellow Democrats control the Senate, Republicans could use a procedural move to block a confirmation vote.
An event is planned at the White House on Monday to formally roll out the choice.
"American families and consumers bore the brunt of the financial crisis and are still struggling in its aftermath to find jobs, stay in their homes, and make ends meet," Obama said in a statement. He said Cordray had "spent his career advocating for middle class families."
The Consumer Financial Protection Bureau, called for in last year's Dodd-Frank financial oversight law, will open its doors on Thursday.
Republicans and the banking industry have disparaged the agency as an unnecessary layer of regulation that, if overzealous, could restrict consumer choice and lending.
Senate Republicans signaled on Sunday they would be reluctant to confirm a new head of the bureau unless their demands for major changes were made.
As a senior adviser to Obama and Treasury Secretary Timothy Geithner, Warren has been tasked with setting up the new agency but became a lightning rod for criticism from conservatives for her outspokenness on financial industry practices that she believes harm consumers.
But Warren is a hero to many Democrats and consumer advocates who were disappointed at Obama's decision not to appoint her.
Warren will not remain in her role as an assistant to the president, a senior administration official said.
'BEST QUALIFIED'
"With her track record of standing up to Wall Street and fighting for consumers, Elizabeth Warren was the best qualified to lead this bureau that she conceived -- and we imagine Richard Cordray would agree," said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee.
"That said, Rich Cordray has been a strong ally of Elizabeth Warren's and we hope he will continue her legacy of holding Wall Street accountable," Taylor added.
Cordray is also known as a vocal critic of the banking industry. He has been working as part of Warren's team on the effort to set up the consumer agency. In December he was named to head up its enforcement division after losing his re-election bid in Ohio.
Cordray is a five-time champion on the television game show "Jeopardy," which tests contestants' knowledge.
He was known in the state as a leader among state attorneys general in a probe of dubious mortgage foreclosures practices.
In a 2009 interview with Reuters, Cordray said it was his duty as Ohio attorney general to hold Wall Street to account.
He said taxpayers were focused on creating wealth while banks, brokerages and insurers were trying to shuffle around that wealth for their own profit.
"It's a badge of honor for us," Cordray said then about his litigation against major financial firms, including Bank of America.
Obama considered the consumer bureau's creation one of the most important parts of the sweeping overhaul of financial regulations he signed into law a year ago in the aftermath of the 2007-2009 financial crisis.
In May, 44 Senate Republicans vowed to block confirmation unless the agency's leadership was changed to a board instead of a single director, its budget was subject to congressional approval, and other financial regulators had a greater say in its oversight of banks.
"Congress raised concerns about the lack of transparency and accountability, but the Obama administration still hasn't addressed those concerns," John Ashbrook, a spokesman for Senate Republican leader Mitch McConnell, said in a statement after the news broke that Cordray would get the nomination.
(Additional reporting by Alina Selyukh, Dave Clarke and Karey Wutkowski; Editing by Eric Beech and Vicki Allen)
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