On April 17, 2017, Politico reported that top White House economic aide, Gary Cohn, recently met with CFPB Director Richard Cordray and delivered an ultimatum: Resign or face removal by President Trump.
According to the article, Cohn “had heard the rumors that Director Cordray wanted to run for governor in Ohio.” According to people familiar with the meeting, Cohn left the dinner thinking that those rumors were accurate. As a result, the White House opted to delay efforts to fire Cordray because the Trump Administration feared that ousting Cordray might “cause a sensation that could boost his candidacy and juice his fundraising.”
Cordray’s five-year term as CFPB Director comes to an end on July 16, 2018. Despite the political pendulum swing that has transferred power to the Republican Party and the Trump administration’s frank opposition to Cordray and the CFPB, it appears that the decision of whether he will finish out his term as Director remains in Richard Cordray’s hands.
We have blogged extensively about the legal battle between PHH and the CFPB, which has the potential to overhaul the Bureau’s leadership structure, or even eliminate the agency altogether. The case is currently under review before the DC Circuit en banc. Oral arguments are set for May and a final ruling from the full DC Circuit is likely months away. Furthermore, many observers anticipate that no matter how the DC Circuit rules the case is bound to be appealed to the Supreme Court where a ruling wouldn’t be issued until well after July 2018, at which point Cordray’s term will have already expired. Interestingly enough, if the court adopts the Trump Administration’s position, it may have the practical effect of giving a future administration the authority to remove Trump’s selection for the next CFPB Director before the end of his or her term.
Even if Director Cordray remains at the CFPB for several more months or until his term concludes, there is no guarantee that the Bureau will be able to successfully finalize pending rulemaking (e.g., payday lending and arbitration). Congress and President Trump have already overridden at least 13 final regulations issued by federal agencies during the Obama era using procedures established by the Congressional Review Act (CRA). The CRA could potentially be used to overturn final CFPB rules. Such an action would also bar the CFPB from reissuing the rule “in substantially the same form” or issuing a “new rule that is substantially the same” as the disapproved rule.
While Director Cordray may be deterred from completing any additional regulations, there is little reason to believe the agency’s day-to-day activities will undergo significant changes. During an interview with the Wall Street Journal in January, Cordray insisted that the CFPB will continue enforcing consumer protection rules at a vigorous pace and that the arrival of the Trump administration “shouldn’t change the job at all.” To this point, there has not been any indication that the Bureau is easing up on enforcement or supervisory activities. In fact, the CFPB has initiated nine enforcement actions since Trump took office.
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