The regulatory mole inside the deregulatory Trump administration has decided to exit. Richard Cordray, director of the Consumer Financial Protection Bureau, announced today that he would resign by the end of the month. It’s a great blow to consumers facing the usual array of financial deceptions.
Cordray was among the last Obama-era officials still leading a federal agency. His five-year term wasn’t to end until July 2018, and, though Republicans constantly pressured President Trump to fire him, Trump could do so only for a specific cause, which could have led to a major lawsuit and a non-trivial likelihood of Trump’s businesses’ and even his tax returns’ being implicated, because a potential legal issue would be whether Trump fired Cordray because of personal liability.
In other words, Cordray was somewhat protected from being canned. Trump himself reportedly said he didn’t want to make Cordray a martyr by firing him. So why wouldn’t Cordray stick it out until next July, maximizing the difference he could make in the lives of consumers before Trump chose some corporate lawyer or bank CEO to replace him?
Part of the answer lies in the vote last month to overturn the CFPB’s arbitration rule, which would have protected a consumer’s right to join a class-action lawsuit over a financial dispute. Congress brushed aside the bad publicity of the Equifax and Wells Fargo scandals to nullify the CFPB rule; Vice President Pence supplied the tie-breaking vote in the Senate, and President Trump eagerly signed the legislation (albeit behind closed doors).
So Congress and the president made very clear that any advance through CFPB rulemaking to assist consumers would be summarily slapped down, effectively curtailing the agency’s authority. CFPB has one big rule outstanding, an initiative to add an ability-to-pay requirement to payday loans. But that rule isn’t set to take effect until July 2019, a year after Cordray’s term would have expired. Whether that rule ever saw the light of day was always going to be up to Cordray’s replacement. Any subsequent rulemaking would likely have the same problem.