Consumer Financial Protection Bureau (“CFPB”) Director Richard Cordray announced his resignation.
In a memo sent to CFPB colleagues, Mr. Cordray touted achievements during his tenure including (i) $12 billion in relief for consumers, (ii) stronger safeguards against certain mortgage practices, (iii) the processing of 1.3 million consumer complaints, and (iv) new financial education and literacy initiatives.
House Financial Services Committee Chair Jeb Hensarling (R-TX) expressed his view that Mr. Cordray’s resignation represents an opportunity to rein in the authority of the CFPB:
“We are long overdue for new leadership at the CFPB, a rogue agency that has done more to hurt consumers than help them. . . . The extreme overregulation it imposes on our economy leads to higher costs and less access to financial products and services, particularly for Americans with lower and middle incomes.”
In contrast, Committee Ranking Member Maxine Waters (D-CA) thanked Mr. Cordray for his efforts and praised the work accomplished during his tenure:
“Under his outstanding leadership, the Consumer Bureau has made the financial marketplace stronger and fairer for hardworking Americans across the country. As the first Director of the Consumer Bureau, he has overseen the implementation of much needed rules on mortgages, prepaid cards, and payday and auto title loans, clamping down on unfair practices and ensuring that consumers are not ripped off.”
Mr. Cordray was nominated to serve as the first Director of the CFPB by President Barack Obama in 2011.
Lofchie Comment: Mr. Cordray’s resignation presents an opportunity to restructure the CFPB in a manner that is consistent (i) with the bipartisan structure of other agencies, and (ii) that gives Congress and the President authority over the agency, including budgetary authority.
The existing regulatory structure now gives President Trump the ability to appoint a new head of the CFPB to serve a five year term. Without a change in structure, the new appointee will serve regardless of whether the President is re-elected or there is a new President that has different priorities. That simply makes no sense.
Likewise, the degree of authority given to the head of the CFPB is not prudent. The position is not directly accountable to the President and any appointee cannot be fired except in extraordinary circumstances. Either the head of the CFPB should be subject to dismissal by the President or the CFPB should be run by a five-person commission that would include persons who could provide some check on the director’s power.