NEW YORK (AP) — Richard Cordray, the aggressive first director of the Consumer Financial Protection Bureau, said Wednesday he will leave the agency by the end of the month.
Cordray was a holdover from the Obama administration, appointed to his position in 2013 for a five-year term. His early resignation will give President Donald Trump a chance to appoint his own leader of the powerful agency, someone who could remake the agency and potentially roll back the protections Cordray and his staff put into place in the CFPB’s first years.
Cordray’s resignation was not unexpected. It was widely believed the Ohio native plans to make a run for governor of his home state, where he was previously the state’s attorney general, next year. He could not simultaneously hold his position as director of the CFPB and announce his candidacy before the February 2018 deadline.
“It has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau,” Cordray said in a memo addressed to agency employees. He did not give a reason for his resignation.
The CFPB was created as part of the laws passed following the 2008 financial crisis and subsequent recession. The agency was given a broad mandate to be a watchdog for consumers when they deal with banks, credit card, student loan and mortgage companies, as well as debt collectors and payday lenders. Nearly every American who deals with banks or a credit card company or has a mortgage has been impacted by new rules the agency put in place.
The CFPB gets its funding from the Federal Reserve and its director is given significant leverage to go after what he or she considers important and cannot be removed from the position except for wrongdoing. Cordray used that mandate aggressively as its first director. The bureau implemented or proposed a myriad of new rules and regulations for the banking industry, which oftentimes made him a target for the industry’s Washington lobbyists and Congressional Republicans who believed Cordray was overreaching in his role, calling the CFPB a “rogue agency.”
As director, he also was able to extract billions of dollars in settlements from banks, debt collectors and other financial services companies for wrongdoing. When Wells Fargo was found to have opened millions of phony accounts for its customers, the CFPB fined the bank $100 million, the agency’s largest penalty to date.
“The resignation of the bureau’s director is an excellent opportunity to enact desperately needed reforms,” said Rep. Jeb Hensarling, the chairman of the powerful House Financial Services Committee and a long-time critic of Cordray, in a statement.
When Trump was elected, Cordray became one of the highest political appointees to be left over from the previous administration. Some Congressional Republicans had urged President Trump to fire Cordray.
While Cordray was able to implement many new regulations on banks, credit card companies and debt collectors, he also lost some notable battles. The GOP-led Congress recently overturned a new CFPB regulation that would have allowed banking customers to ban together to sue their banks in a class action. Another rule, aimed at regulating the payday lending industry, also faces a potential veto from Congress.
Cordray was not Obama’s first choice for the newly created agency. That person was now-Senator Elizabeth Warren, D-Massachusetts, who had proposed the agency in her previous job at Harvard Law School. But Warren, who was an outspoken critic of Wall Street — as she is now — never made it through Senate confirmation.
“(Cordray) is a dedicated public servant and a tireless watchdog for American consumers – and he will be missed,” Warren said in a statement.
Based on Trump’s previous appointments, his choice is likely to be far friendlier to the financial industry than Cordray. A White House spokesman said Trump will choose a successor for Cordray “at the appropriate time.”