WASHINGTON–CFPB Director Richard Cordray has announced he will leave the agency at the end of this month. Many believe he plans to run for governor of Ohio as a Democrat.
Cordray, along with the agency he leads, has been a lightning rod for criticism almost from the time the Consumer Financial Protection Bureau was created. He and the agency have been strongly supported by consumer groups and many Democrats, while Republicans and financial institutions, including credit unions, have bristled at what they consider to be an unnecessary layer of bureaucracy that only adds to the regulatory burden. At the time of its creation, NAFCU had strongly opposed the agency's oversight of credit unions.
That the CFPB director is not accountable to Congress has also been a primary complaint, and there have been numerous calls and even proposed legislation calling for a five-person board to replace the director position. Cordray was the first-ever person to serve as director of the CFPB.
The CFPB was created in the wake of the financial crisis as part of the Dodd-Frank legislation to oversee abuses in consumer financial products, especially those offered by big banks. But community banks and credit unions have argued that Main Street institutions have been bearing the brunt of the Wall Street reforms, leading many to merge.
Cordray’s departure will mean President Trump will get to appoint a new director of the CFPB, who most expect to be far less restrictive on financial institutions and possibly even lead a move toward deregulation.
Cordray, 58, announced his departure to agency staff in an email earlier today. He did not indicate what his future plans might hold, but he has long been rumored to be interested in running for governor of his home state of Ohio.
In a statement following Cordray's announcement, NAFCU CEO Dan Berger said, "NAFCU appreciates CFPB Director Richard Cordray's willingness to meet with credit unions and hear their concerns about the impact of the CFPB's rules. We continue to believe that credit unions should never have been lumped into the same regulatory bucket as the big banks and look forward to continuing to work with new leadership to address credit union issues. Credit unions support and believe in consumer protection, and did not engage in the abuses that led to the creation of the CFPB. Nonetheless, they have been unfairly swept into the tidal wave of new regulations that have come out of the Bureau."
CUNA CEO Jim Nussle said in a statement, "We greatly appreciate that throughout his time as director, Richard Cordray on multiple occasions publicly recognized the exceptional work of credit unions in protecting consumers. CUNA looks forward to a new era at the CFPB that will hopefully reconcile this recognition that credit unions are the pro-consumer protection financial institutions, with rules that reflect that sentiment. Moving forward, CUNA urges the CFPB’s new leadership to address the problems that pending and final rules have caused credit unions and their 110 million members, and move towards a new approach that recognizes the exceptional consumer protections credit unions provide, while continuing to address abusers of consumers."
Former NCUA Chairman Dennis Dollar termed Cordray an "activist regulator" who "seldom found a proposed rule he didn’t like."
"Any replacement in a Trump administration will be more balanced from a business perspective and will, hopefully, actually try to find a workable approach that both protects consumers and does not adversely impact their marketplace choices by unnecessary restrictions on the financial institutions that offer them the products and alternatives they often seek," said the Dollar Associates principal. "There is a chance that, without Cordray’s activism, there could be a reasonable discussion about replacing a single administrator with a three- or five-member board to provide some diversity of thought into the rulemaking process at CFPB. That would be an excellent outcome. Cordray’s personality, activist nature and unwillingness to consider exemptions for smaller institutions have been a barrier to serious discussion of a restructured CFPB because, just as he had his many detractors, he also had many supporters in the consumer protection arena. Extreme positions, both pro consumer and pro business, do not result in good policy. There must be a balance, and Cordray did not – in my view – seek the balance as much as he sought to placate the hard extreme on the consumer protection side.”
But not everyone agrees.
Nick Bourke, director of The Pew Charitable Trusts’ consumer finance project, said, "The CFPB under Richard Cordray’s leadership implemented several important consumer protections, including new regulations that target the worst harms of short-term payday loans. Director Cordray and the bureau spent several years gathering input, and they clearly listened to the stakeholders who commented. If state lawmakers do their part to curtail 400% APR payday installment loans, and if federal regulators enable banks and credit unions to offer better credit alternatives, the CFPB payday loan rule will be a major step toward a safer, more affordable small-dollar loan market for consumers nationwide.”
Current Ohio Gov. John Kasich is barred by term limits to run for the state’s highest office again in 2018. Cordray was elected to the Ohio House of Representatives in 1990, but lost his re-election bid in 1992 following a redistricting. In 1993, he was named as the first Solicitor General of Ohio, and later ran unsuccessfully for Ohio Attorney General in 1998 and the U.S. Senate in 2002. He was elected Franklin County treasurer in 2002 and re-elected in 2004 before being elected Ohio State Treasurer in 2006. He again lost his bid for re-election in 2010, before being named as director of the CFPB in 2012.