UPDATE 1-Vocal bank critic gets key US consumer bureau post

* Ohio attorney general heads consumer bureau enforcement

* Richard Cordray has been active in foreclosure probe

* Fed consumer official to agency rule-writing division (Updates with official announcement from U.S. Treasury)

By Dave Clarke

WASHINGTON, Dec 15 (Reuters) - The U.S. Treasury on Wednesday named Ohio Attorney General Richard Cordray, a vocal critic of the banking industry, to head the enforcement division of the new Consumer Financial Protection Bureau,

The Treasury also named a top official in the Federal Reserve's consumer division, Leonard Chanin, to head rule-writing for the new consumer bureau.

Cordray, a Democrat who lost his re-election bid in November to Republican Mike DeWine, has been a leader among state attorneys general in a probe of dubious mortgage foreclosure practices. The investigation is examining whether banks submitted faulty legal documents in foreclosure proceedings.

Cordray in October announced that he would sue national mortgage servicer GMAC Mortgage and its bailed-out parent company, Ally Financial, for fraud and violations of Ohio's consumer laws.

Elizabeth Warren, the Harvard Law School professor who is setting up the new consumer agency, described Cordray in a statement as the new "cop on the beat" to enforce the consumer provisions of the Dodd-Frank financial reform law.

"Richard Cordray has the vision and experience to help us build a team that ensures every lender in the marketplace is playing by the rules," added Warren, who serves as a special assistant to President Barack Obama and an adviser to Treasury Secretary Timothy Geithner.

The Consumer Financial Protection Bureau is a key plank of the Dodd-Frank law, which was enacted in July. It has the strong support of Democrats and consumer advocates and the strong antipathy of banks and Republicans.

RULE-WRITING TEAM

The agency is expected to have broad power in writing and enforcing rules on mortgages, credit cards and other financial products directed at consumers.

But first, the agency needs to develop and write the rules, taking in comments from the financial industry and consumer groups. That effort will be headed up by Chanin, who is currently deputy director of the Fed's Division of Consumer and Community Affairs, where he has spent about 20 years of his legal career.

Chanin's responsibilities include building the rule-writing team and developing initial proposals, the Treasury said.

The Fed has faced criticism for its failure to implement adequate consumer protections, particularly on rules for mortgages, which many lawmakers blamed for abuses that fueled the financial crisis. The mortgage abuses were a major reason the Consumer Financial Protection Bureau was created to take over consumer rule-writing and enforcement from existing financial regulators.

The new agency, however, is expected to take on many officials and other personnel from agencies such as the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

The consumer bureau does not officially assume its full authorities until next July, one year after the Dodd-Frank law was enacted, and a number of rules for mortgages and credit cards disclosures will need to be in place by then.

The Treasury also named David Silberman, a lawyer formerly with the AFL-CIO and Kessler Financial Services, to head up the new bureau's card markets division. (Additional reporting by David Lawder; Editing by Steve Orlofsky)