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Cordray Tells CFPB Staffers He Is Stepping Down

In an employee email obtained by F&I and Showroom, CFPB Director Richard Cordray announced he will leave his post by the end of November.

by Staff
November 15, 2017
Cordray Tells CFPB Staffers He Is Stepping Down

 

5 min to read


WASHINGTON, D.C. — Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), informed bureau employees on Wednesday that he will be stepping down from his post by the end of the month. The assumption is that the embattled bureau head will enter the 2018 race for governor of Ohio.

The employee email, obtained by F&I and Showroom, makes no mention of Cordray’s future. Instead, the director used most of the 359-word note to praise the bureau’s work since the U.S. Senate confirmed him to a five-year term as director in July 2013 — about four months after the bureau issued its controversial guidance on dealer participation.

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“As I have said many times, but feel just as much today as I ever have, it has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here,” he wrote, in part. “Together we have made a real and lasting difference that has improved people’s lives, notably: $12 billion in relief recovered for nearly 30 million consumers; safeguards against irresponsible mortgage practices that caused the financial crisis and hurt millions of Americans; giving people a voice by handling over 1.3 million complaints that led to problems getting fixed for vast numbers of individuals; and creating new ways to bring financial education to the public so that people can take more control of their economic lives.

“None of that could have happened without all of us being dedicated to pull together in supporting and protecting people and making every consumer count,” he added. “I will always be immensely proud of you and what you have done.”

With his term set to expire this July, Cordray and his leadership have come under intense criticism from lender trade groups and Republican lawmakers, who have called on Donald Trump to fire Cordray since the president’s inauguration. Hensarling, who has been on a crusade to dismantle the CFPB, has pushed legislation through the House that would roll back a number of Dodd-Frank financial regulations and scale back the agency’s authority.

Then there’s the three-judge panel of the U.S. Court of Appeal for the DC Circuit, which ruled last fall that the president has the constitutional power to fire the CFPB director “at will” instead of “for cause.” The ruling has since been vacated and the case is now being considered by the full court of appeals. But that hasn’t stopped calls for Cordray’s firing, with his staunches critic cheering the news of Cordray’s imminent departure.

“We are long overdue for new leadership at the CFPB, a rogue agency that has done more to hurt consumers than help them,” Hensarling said in a statement. “The CFPB tramples on the fundamental economic rights of American citizens, taking away their choices and opportunities.

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“The resignation of the bureau’s director is an excellent opportunity to enact desperately needed reforms,” he added.

Appointed by President Barack Obama, Cordray and the bureau have long been criticized for overstepping their authority and “regulating by enforcement.” That was the auto finance industry’s complaint when the Cordray-led bureau forced settlements with several finance sources using a controversial proxy methodology to allege disparate impact discrimination when dealers set consumer interest rates on auto loans. That statistical method was called into question by a study commissioned by the American Financial Services Association (AFSA) and published in November 2014.

In April, the trade group called on Congress to rein in the bureau by prohibiting its use of the disparate impact theory, limiting its enforcement authority, removing its supervision authority, and by halting the bureau’s use of its complaint database. The AFSA, however, did praise the bureau when it excluded traditional installment lending from its finalized small-dollar lending rule.

“While not always agreeing with Director Cordray’s decisions and rationale for those decisions, we wish him well in his future endeavors,” said Chris Stinebert, president and CEO of the AFSA. “We appreciate his dedication to the interests and the protection of consumers. Unfortunately, his decisions were not always completely developed and created undue burden on consumers’ access to credit, which curtailed lending to the consumer that the Bureau is mandated to protect.”

Many have speculated that Cordray would enter the 2018 race for governor of Ohio once the bureau finalized its small-dollar rule, which it did on Oct. 5. Prior to joining the bureau, the departing director served as Ohio’s attorney general. He also served as Ohio Treasurer and Franklin County Treasurer. But in his letter to bureau employees, the director made no mention of his future endeavors.

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“… One thing I have tried to reinforce this year is that the Consumer Bureau is far more than its director,” reads Cordray’s email, in part. “I am confident you will continue to move forward, nurture this institution we have built together, and maintain its essential value to the American public. 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.”

“My gratitude and appreciation for what you mean to me and to our nation is deep and lasting, and I will be taking the opportunity to make that clear to you in person over the days ahead.”

Like his predecessor, President Trump will get to nominate Cordray’s replacement, a nomination that will require Senate confirmation.

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