WASHINGTON (CN) - Wednesday’s resignation announcement from the head of the Consumer Financial Protection Bureau came as little surprise but fueled anxiety anyway for some watchdog groups.
Richard Cordray offered no explanation for his resignation, which he announced to colleagues in an email and then posted to Twitter account this morning, but the former Ohio attorney general is reportedly eyeing his state’s gubernatorial race for 2018.
Former President Barack Obama tapped Cordray in 2013 for a five-year term as the first director of the powerful agency established in the wake of the financial crisis.
Cordray’s early departure at the end of November will open the office to a nominee appointed by President Donald Trump, who has made no secret of his disdain for Obama-era banking regulations.
“With director Cordray’s exit, it’s thrown us into a lot of uncertainty,” Scott Astrada, director of Federal Advocacy for the Center for Responsible Lending, said in a phone interview.
Astrada explained that his group wants to ensure continuation of the CFPB’s achievements under Cordray — an agenda that included consumer protections against payday loans, binding arbitration and bank-overdraft fees.
“There’s a lot of unfinished business the director expressed on handling that we’d like to continue,” Astrada said. “A lot of the anxiety we have is making sure the regulation activity continues.”
Citing a report from the Miami Herald, Astrada noted that the payday-loan industry is having their next conference at a Trump property.
“It will be interesting to see who Trump nominates for that position and if that person has any ties to the members who are going to be at this payday conference at this Trump property next year,” he said.
To ensure there is no conflict of interest, Astrada said his group will closely monitor Corday’s successor and what role the payday-loan industry will play in that process.
“We don’t want them to have undue influence on who the administration nominates in the industry,” Astrada said.
On the other side of the spectrum, Thaya Brook Knight with the Cato Institute said the CFPB should be disbanded altogether.
“A lot of the agency’s tone is about consumers versus financial services,” Knight said in a phone interview. “I don’t think most financial services see themselves as being antagonistic toward the customers. … The way they make money is to provide services that people want.”
Knight called out payday loans as a service that the CFPB has made inaccessible to Americans.
“Under Cordray’s leadership, there have been a lot of rules that have restricted people’s access to financial products that they should be using,” Knight said.
Cordray was “inappropriately antagonistic” toward the financial industry and misunderstands the role financial products play in people’s lives, she added.
“During his tenure, we’ve seen the problems this can create,” Knight said.
Calling it unlikely that Cordray’s departure will shutter the agency, Knight said creation of a bipartisan commission would be a good substitute.
“Make it so that one person can’t unilaterally make policy,” Knight said. “A new director is likely to do better.”
Knight said the agency’s present structure is “constitutionally suspect,” because it has a single director and is an independent agency.
Astrada denied this, noting that Congress approved Cordray’s office in 2013.
“This isn’t the only agency has that has a single director,” he said. “The assessment that it’s ‘unconstitutional’ is pretty misleading.”
Sen. Elizabeth Warren, D-Mass., posted a wish list for Cordray’s successor on Twitter after the announcement.
“The new director of the @CFPB must be someone with a track record of protecting consumers & holding financial firms responsible when they cheat people,” she said. “This is no place for another Trump-appointed industry hack.”
Astrada would not speculate on why Cordray is stepping down but applauded the director’s work.
“He’s made a tremendous sacrifice,” Astrada said.
Joe Valenti, director of consumer finance at the Center for American Progress, issued similar remarks.
“Since joining the CFPB, Director Cordray has turned a startup agency into a consistent consumer watchdog for the American people,” Valenti said in a statement.
The CFPB “has introduced new rules to protect consumers from predatory practices across a wide range of products, from mortgages to payday loans,” Valenti continued. “And it has strongly fought for college students, student loan borrowers, service members, older Americans, and others dealing with a financial marketplace that has not always had their best interests at heart.”
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