Senate Democrats to Trump: Don’t Fire CFPB’s Cordray

By Gregory Roberts

Leading Senate Democrats said today that they will rally public opinion against Donald Trump if he tries to dismiss Richard Cordray as director of the Consumer Financial Protection Bureau.

“Do not tell Richard Cordray he’s fired,” Minority Leader Chuck Schumer (New York) said in a telephone news conference with Sherrod Brown (Ohio) and Elizabeth Warren (Massachusetts). Brown is ranking member of the Senate Banking Committee, and Warren, who is also on the committee, championed creation of the CFPB before her election to the Senate in 2012.

Cordray is the first-ever director of the CFPB, which was established under the 2010 Dodd-Frank Act that tightened rules on financial services in response to the 2007-08 crisis, and he is a frequent target of Republican attacks on the agency as an example of job-killing regulatory overreach. Republican Sens. Mike Lee, of Utah, and Ben Sasse, of Nebraska, wrote Trump Jan. 9 asking for Cordray’s dismissal.

Cordray’s five-year term expires in 2018, and under Dodd-Frank he can be removed only for cause. The Democratic senators said an attempt by Trump to fire him would be hard-pressed to withstand a legal challenge.

A federal appeals court ruled in October that the CFPB is “unconstitutionally structured” because it is overseen by a single director who can be removed only for cause. The court sought to fix that by striking the for-cause clause, meaning Cordray’s continued service would be at the pleasure of the president, but that order has been stayed pending a decision on a rehearing of the case.

Neugebauer Interviewed

Trump has met recently with former Rep. Randy Neugebauer, from Texas, a persistent critic of the CFPB reportedly under consideration as Cordray’s replacement.

“That’s like putting a sharp-toothed fox in the chicken coop,” Schumer said. “It’s like putting the biggest arsonist that we know of in the firehouse.”

The senators did not identify any formal, official moves they could take to challenge Cordray’s dismissal by Trump, but they said they would work with consumer groups and others to rouse popular opinion against it.

“Any weakening of the CFPB would send a signal to the nation’s lenders and financial institutions that there’s no longer a cop on the beat,” Schumer said.

The senators pointed to the CFPB’s success in returning more than $12 billion to 27 million consumers through actions against shady debt collectors, for-profit schools, payday lenders and other industries under bureau oversight.

Republicans in Congress also have proposed replacing the agency’s single director with a five-member commission, but the Democratic senators threw cold water on that idea. Brown said the Banking Committee, under Republican leadership, failed to act on all but one of the federal agency nominations submitted to it in the past year or so by Democratic President Barack Obama, effectively straightjacketing some of the agencies. They want the CFPB to avoid that fate.

“The whole idea of a commission is to emasculate this agency,” Brown said.

To contact the reporter on this story: Gregory Roberts in Washington at gRoberts@bna.com

To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com

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