The Consumer Finance Protection Bureau has an impressive record of taking on financial industry pirates and renegades. In a short five years, CFPB has taken legal action against banks, mortgage companies, credit card issuers, payday lenders, debt collectors and others, the AP reported, resulting in the recovery of $11.7 billion that was returned to more than 27 million harmed consumers.
Last week the CFPB went after Navient Corp. and two subsidiaries, looking for restitution for affected borrowers and money penalties, after the company allegedly cheated struggling borrowers out of their rights to lower their payments “through shortcuts and deception.”
In the first week of the new year, CFPB made another kill, this time involving two of the nation’s largest credit reporting bureaus. TransUnion and Equifax will together pay more than $23 million in fines and refunds to settle charges after CFPB claimed they misled consumers about the pricing and value of credit products.
You might think that such an strong record would be good for the bureau and its leader, Richard Cordray, who previously served as Ohio Attorney General before losing to Republican Mike DeWine, who GOP insiders predict will be the party’s nominee for Ohio governor in 2018.
But for all his good, honest work on behalf of consumers, Cordray’s neck is on the chopping block if President Donald Trump wins the right to say “You’re fired!”
That could happen if and when a ruling by a federal appeals court, that the agency’s structure violates the Constitution’s separation of powers by limiting the president’s ability to remove the agency’s director, is upheld or overturned after the CFPB appealed the ruling.
Like political cavalry coming to the rescue, Democratic Attorneys General from 16 states and the District of Columbia want to defend the agency and its director in court. The team of 17 AGs is led by George Jepsen of Connecticut, who told the AP that they have often brought legal actions in coordination with the federal agency. If the court ruling gives the president the prerogative to fire Cordray at will, it would usher in a new era of unchecked abuse of consumers by industry players that have largely met their match in Cordray’s defender crew.
Congressional Republicans have opposed and criticized the agency since it was first conceived of by Elizabeth Warren, a Harvard law professor who was elected U.S. Senator from Massachusetts. She was once eyed as the CFPB’s director until Cordray was picked to avoid the battle royal that would have ensured had now ex-President Barack Obama backed her for the position.
According to the AP, the law creating the CFPB after the 2008-09 financial crisis says its director can only be removed “for cause,” such as neglect of duty, and not over political differences. A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled there is a conflict with the Constitution that allows the president to remove executives for any reason. A ruling favorable to President Trump that removes the “for cause” provision opens the exit door for Cordray.
Brown’s Stake In Cordray
What happens to Richard Cordray will has consequences in the midterm elections in Ohio in two years. Democrats have not identified their candidate for governor yet, so if Cordray continues his work in Washington, he won’t be a factor in who Democrats pick to run for the open seat of governor, when Ohio’s term-limited governor, John Kasich, is sent out to pasture. If Richard Cordray gets fired by president Donald, he would instantly ascend to top tier status among a dozen or more possible candidates, including Congressman Tim Ryan of Niles and many lesser known current and former office holders.
Senator Sherrod Brown is a strong supporter of the CFPB and Cordray’s leadership of it, but he also looks forward to being reelected. He stake in the state lineup is paramount, since which ever candidates top the bill for Democrats in two years, that person needs to turnout voters instead of turning them off, as happened in the worst way in 2014 when John Kasich walked too an easy reelection. Cordray returning to Ohio and providing a draw to voters boosts Sen. Brown’s chances to defeat his GOP challenger, which is likely to state treasurer Josh Mandel. If Democrats field another loser like they did in 2014, Sen. Brown will be hurt by lower voter turnout and less enthusiasm for Democrats in general and him in particular.
Sen. Brown, who an analysis by The Hill adds his name to a list of senate seats that could “flip” in two years, when his opponent may very well be the man he beat six years ago by six points, State Treasurer Josh Mandel. Sen. Brown will find it difficult to keep up with Mandel’s expected cache of money from outside funding groups who see Brown as vulnerable in a state where Donald Trump beat Hillary Clinton by over 446 thousand votes last year. Ohio is a red state, since with the exception of one supreme court judge it is controlled by Republicans who occupy all statewide seats and both chambers of the legislature by veto-proof margins.
A state Republican Party lead by its new leader and disciple of Trump, Jane Timken, would love nothing better than to add Sherrod Brown’s head to their portfolio of trophy kills. Purging Democrats from any state or federal seats would be be nothing short of fantastic for Team Trump.
In addition to AG Jepsen, the other attorneys general in the case are from Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont and Washington.