Director Cordray overstays his welcome

Director Cordray of the CFPB has become that guy who stays at the party long after everyone else has left. It is time for him to go. There is no great principle at stake here, other than the right of a president to have oversight over the direction of regulatory policy.

Love him or hate him, Donald Trump, who opposes much of what the CFPB stands for, was elected President by the American people. Nostrovia!  The constitution gives the President the right to exercise executive authority, which includes appointing, albeit with the consent of the senate, his key lieutenants. Nevertheless, Director Cordray has given every indication that he will be fighting to stay on through the end of his term in 2018.  This is not a noble act of principle but of misguided hubris; it will actually do more to harm the CFPB than enhance it.

First, there is the legal argument. The CFPB is an independent agency, but whereas most such agencies are overseen by a board, the Bureau That Never Sleeps is overseen by one man with a six year term. As a result, the Court of Appeals for the District of Columbia is correct when it describes the CFPB director as the second most powerful person in America. It is precisely because the position holds unprecedented power that the Court also ruled that the CFPB director must serve at the pleasure of the President in order for the CFPB to be constitutional. In contrast, under the existing statute the director can only be removed for cause.

Director Cordray could fight to appeal this ruling and for him to finish his term but what would he accomplish by doing so? His refusal to leave is the best example I can think of for why, as structured, the CFPB, may very well be unconstitutional. After all what part of the constitution gives an unelected individual the right to  exercise unchecked power over almost every consumer protection law in the country in open defiance of the elected-president?

Let’s assume. For the sake of argument, that the director is correct and that he has every right to stay for all six years. He can still be removed for “cause.” He seems like one of the most honest people in Washington but that won’t keep him from being pilloried in an attempt to dredge up enough nonsense to provide a legal pretext for firing him. We are already hearing about his alleged misdeeds. And the legality of any enforcement actions taken by the Bureau or regulations it promulgates after January 20th will be tied up in court for years.

In short, if he fights to stay as director he will accomplish nothing of substance, underscore the constitutionally suspect scope of his authority and be dragged through the mud by legislative inquisitors. But if he steps aside he has a record of achievements that will appeal to the populist electoral base of his native Ohio where he is expected to once again seek public office.  He will also be in a better position to defend the bureau from its critics then he will be if he insists on being a virtual captive to his office.

It’s time to turn out the lights.  The party’s over.

Henry Meier

Henry Meier

As General Counsel for the New York Credit Union Association, Henry is actively involved in all legislative, regulatory and legal issues impacting New York credit unions. Whether he’s joining ... Web: Details