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Trump Targets: Consumer Financial Protection Bureau Chair (and other chairs of independent agencies)
Congressional Republicans have fought unrelentingly for years to weaken the Consumer Financial Protection Bureau, put into place under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The purpose of the CFPB is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services. The CFPB was created to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace.
In late March, the White House signaled a desire to fire CFPB Chairman Richard Cordray, an accomplished leader, whose term runs through July 2018.
In the past five years, the bureau’s investigations and enforcement actions against banks and other lenders have returned nearly $12 billion to homeowners, students, servicemen and servicewomen, car buyers, credit card holders and other borrowers who were subject to abusive, deceptive or predatory practices. The bureau is now working on ways to regulate payday lending, where loans often end up impoverishing borrowers.
For years, Mr. Cordray and the CFPB have been doing what Trump campaigned on: protecting Americans from a system that has “robbed our working class." This was among the hundreds of flat-out lies that tens of millions believed which led us to this unthinkable situation.
So why would he want to fire Mr. Cordray? For one, Mr. Trump, despite his populist claims, has promised to dismantle the Dodd-Frank law, with the consumer bureau arguably the law’s most visible accomplishment.
However, the effort to fire Mr. Cordray has additional serious consequences beyond the severe negative impacts to CFPB:
In mid-March, the Justice Department asserted that the director should be removable at the president’s will. That stance is consistent with an earlier 2-to-1 ruling by a panel of the United States Court of Appeals for the District of Columbia Circuit, but it is inconsistent with the Dodd-Frank financial reform law that created the bureau in 2010 and that says the director can be fired only for cause, defined as “inefficiency, neglect of duty or malfeasance.”
This case could proceed to the full appeals court and then the Supreme Court. The result could be a ruling that, if applied broadly, weakens the independence of agencies across the government.
Mr. Cordray is not the only agency head with statutory protections from removal at will by the president. The heads of the Office of Special Counsel, the Social Security Administration, the Federal Housing Finance Agency, the Federal Reserve, the Nuclear Regulatory Commission, the Consumer Product Safety Commission and other agencies are also shielded. Such protection is intended to insulate independent agencies from political interference.
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