Even though his nomination to head the Consumer Financial Protection Bureau sits in limbo, some of the work Richard Cordray did as Ohio's attorney general is coming to resolution. Yet the outcome is probably not to his liking.
Late last month, a U.S. District Court judge in Ohio threw out a case Cordray had spearheaded against the three major credit rating agencies, alleging their responsibility for losses suffered by state pension funds. Now the CFPB's chief of enforcement, Corday served as Ohio's AG from late 2008 to January 2011.
The case blamed Standard & Poor's Financial Services, LLC, Moody's Investors Service, Inc. and Fitch, Inc. for allegedly helping to cause over $400 million in losses to five Ohio pension funds by awarding high ratings to mortgage-backed securities that ended up being toxic.
But in dismissing the case, Judge James L. Graham said there was not sufficient finding that the agencies were aware that their evaluation of the securities would be off the mark.
"The complaint here contains no issuance-specific allegations that the Rating Agencies had knowledge of deficiencies in the
collateral pools, such that it knew that the ratings for each of the 308 securities purchased by the Ohio
Funds were false at the times when the ratings were assigned," Graham wrote in his Sept. 26 order.
Cordray, who also took action against mortgage servicers while Ohio's AG, was nominated in July to run the consumer bureau. The Senate Banking Committee earlier this month approved his nomination along party lines, but a full Senate vote has been held up as Republican vow to reject any CFPB nominee until the administration reforms the new bureau's structure.
