The director of the Consumer Financial Protection Bureau, Richard Cordray, resigned on Wednesday. As one of the last remaining Obama-era banking regulators, he will step down at the end of November. During his tenure, Mr. Cordray has been a frequent target of Republican lawmakers for his tough regulatory stance against banks and other financial institutions.
Mr. Cordray was confirmed to lead the Consumer Financial Protection Bureau (CFPB) in 2013, nearly two years after he was nominated by President Barack Obama. His turbulent tenure was marked by aggressive efforts to rein in banks, payday lenders and debt collectors. His aggressive tactics often made him the target of protests from the business community.
The speculation is that Mr Cordray’s own political aspirations may be the reason for his decision to resign prior to the end of his term next summer. He was once attorney general for the state of Ohio where it is believed that he will soon declare his candidacy for governor’s seat before the February deadline.
“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.” – Richard Cordray in a message to his employees
Over the years, the CFPB has been responsible for billions in fines levied against the major banks and other institutions in the financial services industry. Created under Dodd-Frank in 2010, the CFPB regulates the way banks and other financial companies interact with consumers through issuing regulations.
Republicans believe the financial service industry is over-regulated. Since the election of Donald Trump, they have grown increasingly frustrated by the CFPB which has continued to issue new rules. They have complained that the CFPB has made it more difficult for people to get a mortgage loan and has over regulated some industries, including auto loans. Most recently, Mr. Cordray and the Trump administration debated over a rule that would ban arbitration clauses in consumer lending agreements.
A cornerstone of the Trump administration has been to loosen regulations that constrain economic growth. It is a position that has been counter to Mr. Cordray’s leadership of the CFPB. On Several occasions President Trump has criticized Mr. Cordray’s direction of the bureau, but under the agencies current structure, he could not fire him without cause.
When Mr. Cordray leaves the bureau, we may see a major transformation of the CFPB under Republican leadership. Industry experts expect the bureau’s focus to be less on writing new rules and issuing fines against the financial industry.
President Donald Trump has yet to announce a replacement director. We can expected a candidate more sensitive to the needs of the financial industry. Until then, President Trump will likely name Office of Management and Budget Director Mick Mulvaney, one of Cordray’s most vocal critics, as the interim director.