In a post-inauguration interview with The Wall Street Journal, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray forcefully asserted his and his agency’s independence from the incoming administration of President Donald Trump. Noting that the Trump administration “really shouldn’t change the job at all ... ; [w]e’re expected to work with different administrations of different points of view,” Director Cordray said the CFPB has “an independent mandate to do what we do and we will continue working to protect consumers.”
Cordray made it clear that the CFPB intends to proceed with its aggressive enforcement and regulatory agenda, and was noncommittal on whether the president’s directive to cease promulgating new regulations applies to Cordray’s agency, saying only that the CFPB’s lawyers are reviewing the matter.
Cordray also declined to discuss what, if any, actions he might take should the president seek to remove him from office. As we previously reported (here, here, and here) Cordray was appointed by President Obama for a five-year term and confirmed by the Senate as the CFPB’s unitary director in July 2013. Under the language of the CFPB’s authorizing statute, a director may only be removed by the president “for cause.” However, a panel of the US Court of Appeals for the District of Columbia Circuit held that the CFPB is unconstitutionally structured, and that the appropriate cure for that is to strike the “for cause” language, thus rendering Cordray a noncareer (i.e., political) appointee of the president who can be removed from office at any time.
The CFPB has petitioned the court for a rehearing en banc, and a group of 16 Democratic state attorneys general recently moved to intervene in support of the CFPB. At this point the final outcome is uncertain. Cordray, however, did suggest during the interview that he would respect the courts’ ultimate decision on the matter.
It also is unclear what action the president may take unilaterally with respect to Cordray. Although the prevailing expectation is that President Trump will remove Cordray, recent White House statements have not provided any insight as to the administration’s current thinking thereon. In addition, we do not yet know what actions Congress may take with respect to the CFPB as a whole—such actions could include deauthorizing the CFPB, converting it to a commission, subjecting it to the congressional appropriations process, or subjecting its rules to the standard Office of Management and Budget review and approval process. Again, while we expect Congress to step in and take some action, the nature and extent of its intentions are still unknown.
Takeaways
Cordray’s remarks make clear that he and the agency he directs will continue to act independently, and will not cede or restrain the CFPB’s authority without what the agency considers to be good cause. Therefore, financial institutions subject to the CFPB’s enforcement and regulatory authority should presume until further notice that the agency will continue to function in the same aggressive manner that it has to date. On a more practical level, those institutions should consider immediate challenges to new civil investigative demands and other enforcement actions, lest they later be determined to have suffered procedural defaults should they not do so.
Even if the Trump administration or the courts limit the CFPB’s authority in some manner, the CFPB’s active collaboration with state attorneys general is expected to continue—a group of attorneys general have made it clear that they will continue to exercise their enforcement authority, under either federal law or their own states’ laws, should the CFPB’s authority be limited.