Richard Cordray, who has been head of the Consumer Financial Protection Bureau since its inception six years ago, said today that he will depart his post by the end of November. His term was set to end in July 2018.
Cordray, an Obama appointee, had been in President Trump’s crosshairs since last winter. Shortly after taking office, Trump signed legislation erasing consumers’ ability to file class-action lawsuits against financial services companies, effectively steamrolling a signature CFPB initiative. In the months that followed, the Republican chairman of the House Financial Services Committee, among others, called for Cordray to be fired.
But efforts to oust Cordray were complicated by the CFPB’s structure. Congress created the bureau following the 2008-09 financial crisis, christening it with a mandate to advocate for and protect consumers’ financial well-being. It also stipulated that the bureau’s director, while appointed by the president, cannot be fired by the president without cause.
A lawsuit now in appeals is challenging that attempt to enshrine the CFPB’s independence. While it proceeds, Trump is in a position to hire (if not fire) whomever he chooses for the director role, assuming Congress approves his nominee. Leading candidates include Rep. Jeb Hensarling (R-TX)—the same Republican who called for Cordray’s firing. With the changing of the guard, Republicans see a chance to rein in what many of them view as a “rogue” and “unchecked” agency, as well as an affront to free-market principles. “[T]rue consumer protection is anchored in vibrant, competitive markets,” Sen. Tom Cotton (R-AK) said in a statement.
Cordray’s tenure was marked by changes that benefitted consumers to the tune of $12 billion, some of which he outlined in his farewell letter. He fined Wells Fargo $185 million, for example, for secretly opening customer accounts in order to meet sales goals. But his early exit from Washington leaves many CFPB priorities in doubt, including lawsuits against bad actors including a loan servicer, a mortgage firm, and a bank.
“The Trump administration has a troubling pattern of appointing individuals with contempt towards government agencies to run those very departments,” Sen. Chuck Schumer (D-NY) said in response to the news. “I hope they won’t do that with the CFPB.”AH