Cordray, his bureau surviving GOP blasts
WASHINGTON — Ohioan Richard Cordray, whose federal job empowers him to protect consumers in their dealings with financial institutions, endured a torrent of criticism during a U.S. House committee hearing this month.
“For all the harm inflicted upon consumers,” Cordray should be fired, said one Republican. “You have a rotting agency,” barked a second. “Asleep at the wheel” during the Wells
Fargo Bank investigation, snapped a third.
Finally, Rep. Michael Capuano of Massachusetts sympathetically asked his fellow Democrat: “Boy, they really hate you, don’t they?”
Cordray, the former Ohio attorney general and treasurer who regularly returns on weekends to his Grove City home, has emerged as the federal official who conservatives, credit unions, payday lenders and community banks all love to hate.
As director of the Consumer Financial Protection Bureau, Cordray and his allies say the bureau has obtained $12 billion in refunds for nearly 30 million consumers while levying $600 million in fines to financial institutions for violations.
Just last year, the bureau, the U.S. Office of the Comptroller of the Currency and Los Angeles City Attorney Mike Feuer concluded an investigation showing that Wells Fargo employees had opened thousands of bank accounts without customer approval, prompting Cordray’s bureau to impose $185 million in penalties and restitution.
Yet even as Democrats such as Feuer say the work of Cordray and the bureau “to protect consumers matter now more than ever,” Republicans regularly have castigated it as the worst part of the financial-regulation law approved by Congress after the 2008 financial collapse on Wall Street, which was fueled in part by the spread of shaky sub-prime home mortgage loans.
Not only did last year’s Republican platform assert that Cordray has “dictatorial powers unique in the American Republic,” but also at this month’s hearing, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, complained that “under Mr. Cordray’s leadership,” the consumer bureau “has shown an utter disregard for protecting our markets and has made credit more expensive and less available in many instances.”
“This is not some flamethrower,” Norman I. Silber, professor of consumer law at Hofstra Law School, said of Cordray. “This is a person who has a very solid grasp of what the important problems are, and what the problems are that one can do something about.”
Unless President Donald Trump fires Cordray, he likely will remain in his post until his term expires in July 2018. And while conservatives in Washington would love to have Cordray fired, Ohio Republicans have urged Trump to keep him in office, fearing he would return to Ohio and run for governor next year.
“Canonizing Cordray” by firing him would make him “the odds-on favorite for getting the Democratic nomination for governor,” said Dennis Eckart, a former Democratic congressman from Cleveland. “He would be clearly defined by Trump’s own actions as the anti-Trump candidate.”
Cordray’s office did not make him available for an interview, preferring to provide written responses to questions. When asked whether he would run for governor, Cordray replied, “I am 100 percent focused on my job to protect consumers.”
But Republicans are unconvinced. During the hearing, Hensarling sarcastically expressed surprise to see Cordray at the witness table because “there have been many press reports saying that you would have otherwise returned to Ohio to pursue a gubernatorial bid.”
Cordray and the bureau have been in the bull’seye for conservatives and some financial institutions since the bureau was first created in 2010 — an idea championed by Democrat Elizabeth Warren, now a U.S. senator from Massachusetts.
With the Senate refusing to confirm his nomination in 2011, President Barack Obama used a recess appointment to place Cordray in the director’s post. It was not until 2014, with the support of Ohio’s senators — Democrat Sherrod Brown and Republican Rob Portman — that the Senate confirmed Cordray.
The bureau also has tried to devise regulations requiring financial institutions to write terms of credit-card agreements and home mortgage loans in an easy-to-understand manner.
“They took complicated financial information and simplified it,” said Ryan Schick, a former small-business adviser to Columbus Mayor Andrew J. Ginther. Schick said small-business owners told him the consumer bureau has “peeled away some of the smoke.”
But the opposition has continued, with Portman himself objecting to the bureau’s structure. He and many financial institutions have said that placing authority to run the bureau in the hands of a single director is unconstitutional, pushing instead for a board of commissioners such as the Federal Elections Commission.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled 2-to-1 this past October that the director setup violated the Constitution because the president could fire the director only for cause, such as neglecting his work. The full appeals court will hear the case later this year, and it could be well into next year before it goes before the U.S. Supreme Court.
Defenders of placing power in the hands of a single director say it leads to rapid decisions. Adam Stetter, executive vice president of the Independent Community Bankers of America, said, “From our perspective, it’s not about quick decisions; it’s about getting the decisions right. The fivemember board would allow the opportunity to get good, deliberative decisions.”
Although Stetter said he did not “have an issue” with Cordray’s performance, he complained of the “accumulation of the regulations that community banks have to comply with. That takes them from doing their primary job of serving their customers.”
Community banks tend to be smaller than the banking giants on Wall Street. Community banks in the Columbus area include First City Bank, Arlington Bank, Woodforest National Bank and CNB Bank.
In his quiet style, Cordray has firmly defended the consumer bureau. During his appearance before Hensarling’s committee, Cordray said that “those who talk about weakening or destroying the consumer bureau are missing the importance of the work we are doing to stand up for individuals and families all over this country.
“Nobody should want to return to a system that failed us and produced a financial crisis that damaged so many lives,” he said.