President Trump’s First Target Could Be CFPB Director Cordray
The Dodd-Frank Act has many critics. Though supporters would argue that it has been successful on many fronts, a hotly debated area is the Consumer Finance Protection Bureau (CFPB). Led by Director Richard Cordray, the CFPB has a broad role. It is charged with protecting consumers in the financial sector. This includes everything from banks to pay day lenders, from credit cards to securities firms. The CFPB has returned more than $11 Billion to consumers since its creation and helped to unravel the Wells Fargo fraudulent account scam.
However, Republicans have been critical of the CFPB in general and Director Cordray in particular. Senator Ben Sasse (R-NE) and Senator Mike Lee (R-UT) have called on President Trump to fire Director Cordray immediately. The Trump Transition Team has signaled an intent to do so. The senators believe that, despite the success of the agency in returning funds to consumers, the Director and the CFPB have not been accountable to the public or to Congress. Perhaps that is because the Dodd-Frank Act provides that the director reports directly to the president. He serves a 5-rear term, expiring July, 2018, and can only be removed for cause.
Neither the senators nor President Trump have articulated their justification for calling for the firing of Mr. Cordray. While there is a recent DC Court of Appeals ruling holding that the CFPB’s structure is unconstitutional because the director can’t be terminated, should the president take action prior to an appeal, a battle with Senate Democrats is sure to arise. Senators Elizabeth Warren (D-MA), Chuck Schumer (D-NY) and Sherrod Brown (D-OH) announced in a joint conference call last week that they will do every thing they can to prevent the president from dismissing Director Cordray. Senator Schumer says, there is no cause.
Clearly, the first battle of the new administration in consumer finance is shaping up. Dodd-Frank has many flaws that can be fixed. But firing the director will not solve the problems, nor will be a total dismantling of the law or disregarding the safeguards which were put in to the law to protect against the politicization of consumer protections. We can’t solve these important issues by posting these at risk in the middle of a political war.