Special Report

Richard Cordray’s ‘Heroes’ Occupy Banks and Private Homes

Obama consumer nominee's long support of radical East Side Organizing Project.

By 12.5.11

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When asked about the "Occupy Wall Street" movement in October, Massachusetts Senate candidate Elizabeth Warren praised it to the hilt. "I created much of the intellectual foundation for what they do," she told the Daily Beast. Yet when pressed in November on the OWS adherents' increasingly violent tactics, she told a Boston TV interviewer: "Everybody has to follow the law. There's no exception on that."

But Warren's apparent disavowal of the tactics of OWS and like-minded community organizers may not be shared by Richard Cordray, President Obama's nominee to head the Consumer Financial Protection Bureau that Warren designed. Cordray has long supported ESOP, formerly known as the East Side Organizing Project, an Ohio housing advocacy group that has distinguished itself by storming into banks and launching plastic "shark attacks" on the lawns of private homes. ESOP's leaders brag about what they call their "organized hits" on banks and other targets, which have included the home of the late Congressman and Housing and Urban Development Secretary Jack Kemp.

As Ohio treasurer and attorney general, Cordray lobbied for state and federal funding for ESOP and publicly praised funders of the group as "the real heroes." And in a highly unusual move for a nominee awaiting confirmation, Cordray returned to Ohio in October to be the keynote speaker at the group's gala dinner.

Since his nomination in July to head the bureau created by the Dodd-Frank financial "reform" law, Republicans have held fast against confirmation. But largely, they haven't made Cordray's state record an issue. They have focused instead on structural defects in the agency's design, such as the massive new powers the bureau will have to ban financial products it deems "abusive" and its lack of accountability to Congress.

These criticisms are valid, but they may not be enough to hold Senate Republicans together without criticism of the nominee's merits. Just before Thanksgiving, Scott Brown (R-Mass.), facing a tough reelection challenge from Warren, became the first GOPer to commit to voting for Cordray. The Democrat-controlled Senate plans to hold a vote on his confirmation this week, possibly as early as Tuesday. Human Events' Neil McCabe reports that in addition to Maine Sens. Susan Collins and Olympia Snowe, other GOP targets for Cordray supporters include Alaska's Lisa Murkowski, Tennessee's Bob Corker, and Cordray's home state Senator Rob Portman of Ohio (though Portman seemed to reaffirm his opposition in a statement to Human Events last week).

But Cordray's support of ESOP needs further scrutiny, particularly since as head of the bureau, he will have the power to help funnel federal support to ESOP and like-minded community organizers with virtually no oversight by Congress. And a report by Bloomberg News suggests that Cordray specifically blessed ESOP's "organized hits" on banks and homes.

As reported by Bloomberg upon Cordray's nomination in July, "Mark Seifert recalls being impressed when Richard Cordray, then the Ohio state treasurer, walked into the offices of his Cleveland activist group one day in August 2007." Seifert recalled warning Cordray: "We are not necessarily safe for the powers-that-be to hang around with. We do direct action. We throw plastic sharks at bankers."

According to Bloomberg, "'Far from being aghast, Cordray approved of the tactics [emphasis added] and said the small, Cleveland-focused group should expand,' Seifert recalled." Since that time, the community organizing group, which has changed the full name underlying its acronym to Empowering and Strengthening Ohio's People, has expanded to more than 10 offices across the state and grown its staff from five to about 40.

ESOP's growth is due in no small part to Cordray's support. According to the Cleveland Plain Dealer, as state treasurer and AG, Cordray "helped them find grants to expand." With state and federal funding that Cordray helped secure, ESOP grew from a "little ACORN" -- to borrow the phrasing of Subversion Inc. author and TAS contributor Matthew Vadum -- into a powerful tree. But its core is still rotted by its tactics of threats and intimidation.

In fact, national Leftie pundits praise ESOP for taking militant "direct action" to whole new levels. As the Huffington Post recently put it, "ESOP takes a civil approach, but stops at nothing to get lenders to negotiate options for homeowners who face foreclosure." In other words, the group is civil until it isn't.

As the New York Times recently described ESOP's actions in a glowing opinion profile, after demonstrating in front of a lender's office, ESOP "would fill a bus with community members, drive out to the suburban house of a regional vice president and demonstrate there. ESOP's signature tactic was to throw hundreds of two-inch plastic sharks on the lawn and circulate flyers saying, 'Your neighbor is a loan shark.'"

Although ESOP may not do as many organized "hits" as it did in the past -- their last major "hit" seemed to be a storming of JPMorganChase bank branches in 2009 with busloads yelling "Chase Bank Sucks" -- group leaders make it clear that it's a tactic in their arsenal. When negotiation "doesn't work, that's when we really start to have fun," an ESOP employee told the Press, a Toledo, Ohio newspaper, in late 2010. "It's an organized hit." ESOP founder Inez Killingsworth stressed to the New York Times: "The word has gotten around. Now, most of the time we ask for a meeting, we get a meeting."

Killingsworth, still active with ESOP as board president, first gained fame for a threatened "hit" in the '90s on the home of Jack Kemp, then secretary of Housing and Urban Development in the first Bush Administration. Killingsworth and other housing advocates visiting the Washington, D.C., area threatened to disrupt Kemp's daughter's wedding being held at the family home. "Then all of a sudden, he calls us to say he'll meet us if we promise not to hit his daughter's wedding," Killingsworth recounted to the Cleveland Plain Dealer in 1992. Kemp met with the "advocates" a few months later.

Cordray continued to embrace ESOP during his Ohio political career and even during his current nomination fight. At an Ohio housing summit in 2009, Cordray showered praise on the government agencies that funded ESOP. "A number of community groups working with homeowners, especially ESOP, got more funding and local agencies have been the real heroes," Cordray said in a statement reported by the Gannett-owned Mansfield (Ohio) News Journal (story available here with a fee).

If confirmed as director of the consumer bureau, Cordray will have plenty of chance to be such a "hero" and to throw federal support ESOP's way. In addition to its broad powers from Dodd-Frank to ban any financial product it deems "abusive," the bureau has authority to hire "contractors" to help with consumer issues. And as most Republicans have pointed out in their objections to approving a director, the bureau gets a guaranteed independent stream of funding from the Federal Reserve, denying Congress the oversight through the appropriations process that it has with other agencies.

Cordray seemed very eager to address ESOP, returning to Ohio in October to address what the Cleveland Plain Dealer described as the group's "annual gala and silent auction" at the Cleveland Marriott Downtown. Strangely, neither the Plain Dealer nor other media reported on the contents of Cordray's speech, nor can one find it on ESOP or the consumer bureau's website. So much for transparency!

ESOP, not surprisingly, is fighting hard for Cordray's Senate confirmation. In a remarkable interview with Human Events' McCabe, ESOP executive director Mark Seifert pooh-poohed concerns about lack of congressional oversight. Conceding that "the CFPB will have a lot of power," Seifert then exclaimed, "Congress sat silent for 10 years, now all of a sudden they want oversight? Go to hell, no!"

But it is not only Congress whose oversight would be curtailed if Cordray is confirmed, but the next presidential administration as well. Once confirmed, Cordray (with likely influence from ESOP) will be in power until late 2016. That would cover nearly the entire term of the next president, whoever he or she may be.

Under Dodd-Frank, McCabe explains: "The director would serve a five-year term that overlaps presidential terms. This means, an incoming president could not appoint his own director, nor does the director serve at the pleasure of the president."

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About the Author
John Berlau is Senior Fellow for Finance and Access to Capital at the Competitive Enterprise Institute and blogs at OpenMarket.org.