On Tuesday (Jan. 17) top Democrats announced plans to defend the Consumer Financial Protection Bureau if President-elect Donald Trump moves forward with removing Richard Cordray as head of the CFPB upon being sworn in later this week, American Banker reported.
Sens. Chuck Schumer of New York, Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts held a conference call with reporters in which they stated they would pursue legal action if any attempt is made to end Cordray’s term prematurely.
“Do not tell Richard Cordray he’s fired,” Sen. Schumer said in comments directed at Trump, according to American Banker. “We think the odds are high a legal challenge would work, and we are urging the administration to forgo that long process and keep Cordray.”
A heated battle over the CFPB’s funding structure and leadership structure has been brewing since late last year, leaving its future in 2017 looking quite uncertain.
“No agency head has been fired for cause for a century — it is an extreme and unprecedented step,” Warren told reporters during the call. “It would be a real battle.”
The CFPB has been controversial since its start, particularly the wide-ranging and nearly unchecked powers of its director and a funding structure that leaves it largely independent of congressional oversight, since it doesn’t need them to fund what it does. But given that most pundits and professional politics watchers were predicting a third Democratic president — if anything, most were predicting business as usual.
That calculus all went straight out the window on Nov. 8 when Donald Trump — an avowed opponent of Dodd-Frank, which gave the CFPB its life — actually won the White House. Among his earliest promises? Dismantling Dodd-Frank.
“The CFPB is an unaccountable bureaucracy rife with racial discrimination that churns out regulations that harm consumers, especially those with low and moderate incomes,” Jeff Emerson, a spokesman for House Financial Services Committee Chairman Jeb Hensarling, said in an email to PYMNTS. “Effective consumer protection requires providing Americans with the information they need to make informed decisions, policing markets for fraud and deception and promoting competition and choice among financial products and services.”
However, some believe the Republicans’ eagerness to derail the CFPB may actually backfire.
According to Bloomberg, there are not only disagreements among Republicans about how to make a major change regarding the CFPB, but bankers are also putting up an unlikely but formidable opposition.
People familiar with the matter told Bloomberg that advisers of Trump’s transition are exploring different legal options to fire CFPB Director Richard Cordray and replace him with someone that can carry out dismantling the agency. Another strategy involves pushing legislation through Congress that could result in an overhaul of CFPB funding and essentially starve the agency of money.