President Barack Obama made another bet on swing-state Ohio by flying in to Cleveland to announce his appointment of a former Buckeye State Democrat to run the federal government?s new far-reaching financial regulatory agency.
The controversial announcement of Richard Cordray to run the Consumer Financial Protection Agency is also a political reach for the state?s 18 must-win electoral votes in 2012. So far, polls shows that most of the state?s voters disapprove of Obama?s performance.
Cordray is ?a son of Ohio, a good young man,? Obama declared on Wednesday to the students at suburban Shaker Heights High School during his midday speech.
Shaker Heights is among the Cleveland metropolitan area?s wealthiest suburbs, boasting far-above-average property values and income levels.
?For almost half a year, Republicans in the Senate have blocked Richard?s nomination,? he said, prompting boos from the largely African-American audience. Republicans, he said in his campaign-style speech, ?want to weaken the law, they want to water it down ? That makes no sense.?
The appointment is controversial, partly because Obama is treating it as a recess appointment even though the Senate is not in recess. GOP officials said they will go to court to have the appointment invalidated, because the U.S. Constitution limits recess appointment to periods when the Senate is actually not in session.
However, a dramatic court battle might help Obama, partly because his aides are already using the appointment to cast Obama as the protector of middle-class workers from predatory Wall Street bankers, including former Massachusetts Gov. Mitt Romney. (RELATED: Full coverage of Barack Obama)
?For way too long, we?ve had a financial system that stacked the deck against ordinary Americans.? Banks on Wall Street played by different rules than businesses on Main Street. ? Hidden fees and fine print led consumers to make financial decisions they didn?t always understand,? he said.
Obama also cited the example of a local couple who lost $80,000 to a financial scam, saying ?we cannot allow people to be cheated.?
Cordray ?is the right man for the job,? he insisted. ?If you?re a student, his job will be to protect you from dishonest lending practices and make sure you have all the information you need on student loans. ? If you?re a senior, Richard will help make sure you don?t lose your home or your retirement because someone saw you as an easier target.?
The focus on government management of Wall Street plays to the public?s anger towards the financial sector following the 2007 collapse of the government-boosted real estate bubble.
Obama tried to reinforce that anger, saying ?all that risky behavior [on Wall Street] led to an economic crisis that we?re still digging ourselves out of.?
Federal regulators, however, actually pressured and subsidized banks to provide mortgages to poor people during the 1990s and 2000s ? including tens of thousands who were incapable of repaying the loans. The resulting real-estate bubble burst in 2007, causing the financial collapse on Wall Street and the subsequent recession.
Progressives say more extensive regulation by their allies would have provided beneficial regulation and avoided the resulting bubble and collapse. Free-market advocates say the financial sector is too complex to be managed by government, and that central management will led to political cronyism, reduce productivity and create new financial disasters.
In 2008 and in 2011, Wall Street?s leading executives donated far more to Obama?s campaigns than to those of Republicans.
One of the donors was Jon Corzine, a Democratic Senator whose firm, MF Global Holdings, collapsed in November amid charges of political dealmaking and fraudulent handing of $1.2 billion of unaccounted funds.
Cordray could not win appointment in the Senate, partly because Republicans feared he would use his regulatory power to aid Obama.
After the 2008 election, Cordray used his power as Ohio?s attorney general to shield three state employees from charges they had unlawfully rifled through government databases to search for information that would be embarrassing to an Obama critic, Joe ?the Plumber? Wurzelbacher.
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