Consumer Financial Protection Bureau chief Richard Cordray plans to leave the agency several months shy of the expiration of his five-year term, the inaugural head of the newest federal oversight body for the financial industry told staffers in an email Wednesday.
“[O]ne thing I have tried to reinforce this year is that the Consumer Bureau is far more than its director,” Cordray wrote in the memo, calling on staffers to help the young agency “maintain its essential value to the American public” after he leaves later this month. “And I trust that new leadership will see that value also and work to preserve it — perhaps in different ways than before, but desiring, as I have done, to serve in ways that benefit and strengthen our economy and our country.”
Cordray’s abrupt departure comes after years of work by Wall Street’s allies in Congress to strip the agency of its independence, an effort for which the CFPB’s director was a natural lightning rod. Republican members and allied groups have varyingly (and falsely) accused Cordray of running a modern gestapo and channeling Soviet tendencies toward micromanaging commerce, among other smears.
A handful of Democratic electeds have sabotaged the agency’s work in a less overt but more substantive fashion as well. Sen. Mark Warner (D-VA) is looking to knock the legs out from under CFPB’s effort to rein in payday lending nationwide, for one recent example. Former Democratic National Committee chair Debbie Wasserman-Schultz famously went to bat for payday lenders using bogus statistics to mislead the public about the same rulemaking.
But Republican members have persistently, methodically, and doggedly targeted the agency’s ability to set and uphold basic standards for how corporations interact with human beings since before Cordray even had the job he’s leaving. During the drafting of legislation that became the Dodd-Frank Wall Street reform package in 2011, Republicans reliant on financial industry donors repeatedly sought to eliminate the CFPB from the bill entirely.
Failing at that, they tried to change its structure to keep Congress in control of its leadership and budget — anticipating, correctly, that the agency was much more likely than the law’s esoteric rulemaking schemes to offer a plain, direct demonstration to ordinary people of the value of regulation.
When that didn’t work either, 43 Republican senators pledged to blockade any nominee to head the new agency in defiance of the new oversight law. The group had received $143 million combined from financial industry campaign donors at that time. Sen. Mike Lee (R-UT) openly acknowledged that his role in the obstruction sprung from “my opposition to the creation of CFPB itself” rather than from the design-flaw arguments that agency opponents typically make in public. Such core design changes at the agency continue to be the primary scheme of Wall Street allies hoping to take the newly-minted consumer cops back off of the beat.
Lawmakers are likely to continue pushing to replace the CFPB’s unitary director with a board under their control with or without Cordray in the picture.
It’s unclear who President Donald Trump might turn to as a replacement in the meantime as those efforts continue on Capitol Hill. But if the notoriously distractible administration cares to move quickly here, it has a number of available candidates suited to replace Cordray’s pragmatic approach with right-wing economic ideology.
Rep. Jeb Hensarling (R-TX), long a leader of the congressional effort to sabotage Cordray’s tenure, has already said he will not seem reelection in 2018. Industry observers also note Hensarling has several colleagues who would fit the Trump bill here, including former Reps. Scott Garrett (R-NJ) and Randy Neugebauer (R-TX).
If the president prefers an economist to a politician, the bench of conservative thinkers on consumer finance policy is even deeper. Top names from the rumor mill there include Todd Zywicki, a professor at the right-wing-backed Mercatus Center inside George Mason University, and Mark Calabria, the libertarian economist who advises Vice President Mike Pence.
Regardless, members opposed to the agency’s mission have now lost their favorite punching bag — a serious blow considering that voters love financial regulation. The mass campaign from Republican-aligned political groups will have to retool its ads, many of which sought to make Cordray the personal avatar of their grousing against an agency that voters adore.
And for supporters of the agency’s successful work recouping billions of dollars in fines and restitution for wronged consumers, Cordray’s departure is cause for chagrin.
“Obtaining $12 billion in relief for over 29 million Americans is a great accomplishment,” Americans for Financial Reform’s Lisa Donner said in a statement. “Director Cordray did exemplary work on behalf of the American public, often under extremely tough circumstances, ably advancing this vitally important mission.”
With $12 billion in accounts receivable in less than five years, the data-driven CFPB can claim a more successful early run than many Silicon Valley start-ups. Many of the board’s regulatory efforts have been rockier, with consumer advocates often unsatisfied with the final shape of regulations targeting the fine print of payday lending, debt collection, and forced arbitration contracts. After years of consultation with industry actors, consumer advocates, and brand new research driven by the data the agency collects, the group’s early regulatory efforts may never take effect with Trump in power.
“Under his outstanding leadership, the Consumer Bureau has made the financial marketplace stronger and fairer for hardworking Americans across the country,” House Financial Services Committee ranking member Maxine Waters (D-CA) said in a statement marking Cordray’s announcement. “I thank Mr. Cordray for always standing up for all Americans and standing up to abusive financial institutions.”