NEW YORK — Richard Cordray, the aggressive first director of the Consumer Financial Protection Bureau, plans to leave the agency by the end of the month, giving President Donald Trump a chance to appoint a replacement likely to be friendlier to the financial industry.
Cordray was a holdover from the Obama administration, appointed to his position in 2013 for a five-year term. Under his leadership, the CFPB implemented or proposed a myriad of new rules and regulations for the banking industry.
The announcement was not unexpected. It was widely believed the Ohio native plans to make a run next year for governor of his home state, where he was previously the state’s attorney general. Cordray declined comment on his political future when reached Wednesday by The Associated Press.
A White House spokesman said Trump will choose a successor for Cordray “at the appropriate time.” The president could appoint a new director who could remake the agency and potentially roll back the protections Cordray and his staff put into place.
The CFPB was created as part of the laws passed following the 2008 financial crisis and subsequent recession. The agency was given a broad mandate to be a watchdog for consumers when they deal with banks, credit card, student loan and mortgage companies, as well as debt collectors and payday lenders. Nearly every American who deals with banks or a credit card company or has a mortgage has been impacted by new rules the agency put in place.
The CFPB gets its funding from the Federal Reserve and its director is given significant leverage to go after what he or she considers important and cannot be removed from the position except for wrongdoing. Cordray used that mandate aggressively as its first director, which often made him a target for the banking industry’s Washington lobbyists and Congressional Republicans who believed Cordray was overreaching in his role, calling the CFPB a “rogue agency.”
As director, he also was able to extract billions of dollars in settlements from banks, debt collectors and other financial services companies for wrongdoing. When Wells Fargo was found to have opened millions of phony accounts for its customers, the CFPB fined the bank $100 million, the agency’s largest penalty to date.
“The resignation of the bureau’s director is an excellent opportunity to enact desperately needed reforms,” said Rep. Jeb Hensarling, the chairman of the powerful House Financial Services Committee and a long-time critic of Cordray, in a statement.
When Trump was elected, Cordray became one of the highest political appointees to be left over from the previous administration. Some Congressional Republicans had urged Trump to fire Cordray.
While Cordray was able to implement many new regulations on banks, credit card companies and debt collectors, he also lost some notable battles. The GOP-led Congress recently overturned a new CFPB regulation that would have allowed banking customers to ban together to sue their banks in a class action. Another rule, aimed at regulating the payday lending industry, also faces a potential veto from Congress.
Cordray was not Obama’s first choice for the newly created agency. That person was now-Senator Elizabeth Warren, D-Massachusetts, who had proposed the agency in her previous job at Harvard Law School. But Warren, who was an outspoken critic of Wall Street — as she is now — never made it through Senate confirmation.
“We need to make sure the next leader of the CFPB builds on the agency’s good work rather than opposing it,” Warren said at a press conference. “This is a big test for Donald Trump. He said on the campaign trail he would stand up to Wall Street and defend forgotten Americans. That is literally the job of the CFPB: to stand up to Wall Street.”
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