Cordray stepping down, paving way for change
Richard Cordray, one of the few remaining Obama-era banking regulators, said on Wednesday that he plans to step down as head of the Consumer Financial Protection Bureau by the end of the month, clearing the way for President Donald Trump to remake a watchdog agency loathed by Republicans and Wall Street.
Cordray’s decision comes just a month after the CFPB suffered a major rebuke from Republicans in Congress who took the unusual step of blocking an agency rule that would have allowed consumers to sue their banks for the first time. Cordray appealed to President Trump directly not to sign the legislation but was rebuffed.
“As I have said many times, but feel just as much today as I ever have, it has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here,” Cordray said in a message to employees. “I trust that new leadership will see that value also and work to preserve it — perhaps in different ways than before, but desiring, as I have done, to serve in ways that benefit and strengthen our economy and our country.”
Republicans had become increasingly exasperated that Cordray, whose term does not end until next summer, had not stepped down and that the agency continued to issue aggressive rules disliked by the business community. Trump has on at least two occasions griped about Cordray in private and wondered what to do about his tenure, according to two financial industry executives who attended the meetings.
With Cordray’s departure, the aggressive regulatory structure put in place by the Obama ad- ministration in the wake of the global financial crisis has been nearly entirely replaced. The head of the Securities and Exchange Commission has been replaced by a former Wall Street lawyer and the Senate is moving to approve Trump’s pick to lead the Office of the Comptroller of the Currency, another important banking regulator. The head of the Federal Deposit Insurance Corp., Martin Gruenberg, has said he will step down at the end of the month.
The transformation coming for the CFPB could be significant. The agency was one of the central achievements of the Obama administration following the 2008 financial crisis. Created under 2010’s financial reform bill, known as Dodd Frank, it regulates the way banks and other financial companies interact with consumers, policing everything from payday loans to mortgages. It has extracted billions in fines from big banks, including $100 million from Wells Fargo last year for opening millions of sham accounts that customers didn’t ask for.
Within minutes of Cordray’s public announcement, one of the CFPB’s staunchest critics, Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, cheered the move.
“We are long overdue for new leadership at the CFPB, a rogue agency that has done more to hurt consumers than help them,” said Hensarling, who has touted legislation that would strip the agency of many of its powers.