Richard Cordray was confirmed as the head of the Consumer Financial Protection Bureau (CFPB) in 2013 under President Barack Obama. The CFPB was formed by Congress following the 2008 financial crisis. Although his term ends in July of 2018, Cordray has announced that he will resign at the end of November, 2017. Cordray reportedly plans to run for governor of Ohio after he resigns. His departure as head of the watchdog agency will give President Donald Trump an opportunity to appoint a new head of the agency and undo many of regulatory changes Cordray made in the financial industry. The agency regulates banks, mortgage lenders, debt collection agencies, payday lenders, small loan companies, credit card companies and others.
Cordray’s resignation will have a major impact on the financial services industry because he used his position to enact regulations designed to enforce federal consumer financial laws and protect consumers in the financial marketplace. Before the formation of the CFPB, many of the functions of the agency were spread out among several agencies. Many of the changes made during Cordray’s tenure as head of the agency were made in the form of regulations.
President Trump is not a fan of government regulations and it is expected that he will take steps to appoint someone who is more industry friendly. He is reportedly considering Office of Management and Budget (OMB) Director Mick Mulvaney as interim director of the bureau. Mulvaney is a former congressman from South Carolina and he sat on the Financial Services Committee. He is reported to have called the agency a “sad, sick joke.” He also co-sponsored a bill to eliminate the agency. President Trump is also said to be considering Treasury Secretary Steve Mnuchin for the interim post. Consumers fear that either appointment would result in a radical departure from the current direction of the agency.
Congress has also taken steps to reign in Cordray’s activities at the agency. In a major victory for President Trump and a major defeat for the CFPB, Congress blocked a CFPB regulation last month which would have prevented banks and other large financial institutions from including mandatory arbitration clauses in their agreements with consumers.
Authored by Charles E. Griffin