Going Rogue

A couple of months ago I wrote about the incredible arrogance and chutzpah of the now-former director of the Consumer Financial Protection Bureau, Richard Cordray.

“In a country loaded with way too many arrogant politicians and government officials who think they are above the law and normal standards of decency, Cordray has set the bar pretty low,” I wrote back then. “Few public officials have shown the level of contempt for legitimate questioning from Congress, the White House and the industries his agency oversees than Cordray has shown since he took over the CFPB, and it’s only gotten worse in the past few months as his tenure winds down.”

It turns out that I grossly underestimated just how devious and cynical he can be.

On his way out the door last Friday, the day after Thanksgiving, Cordray took it upon himself to appoint his second-in-command, chief of staff Leandra English, to succeed him. At the same time, President Trump appointed his budget director, Mick Mulvaney – a very vocal opponent of the CFPB – to run both agencies until a permanent replacement at the consumer agency is named and seated. English followed that up by filing a lawsuit in federal court on Sunday seeking an injunction ordering the president to halt the Mulvaney appointment, setting up a scenario in which both Mulvaney and English were wrestling over who gets to sit in the CFPB director’s chair.

Notably, as American Banker pointed out, English filed the lawsuit on behalf of herself, not the CFPB, which is backing Trump and says Mulvaney is in charge. “I advise all Bureau personnel to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB," Mary McLeod, the agency's general counsel – and a Cordray appointee, no less – wrote in a memo to bureau employees.

In his last act before leaving the agency, a week earlier than expected, Cordray promoted English to deputy director, effectively making her the acting director. Cordray cited a section of the 2010 Dodd-Frank law that created the CFPB that states a deputy director will “serve as acting director in the absence or unavailability of the director.” Yes, even then the creators of the act and the agency were already at their sinister work.

None other than former congressman Barney Frank, one of the principal authors of the legislation – as well as the global financial crisis that necessitated it – rose to Cordray’s defense.

“If you look at the CFPB language it is very specific, and it was designed to protect an agency that we knew would be under a lot of pressure,” Frank told the Washington Post. “This is an agency that enforces the rules against some of the most powerful financial interests in the country. Everything was structured for its independence.”

That includes no oversight or budgetary approval by Congress, i.e., taxpayers and voters. The CFPB gets its funding through the Federal Reserve. The agency was also set up to be run solely by a director who could not be removed even by the president except for cause. To his credit, Trump never tried to remove Cordray while he held the post, although Cordray certainly tried his patience.

While I’m sure Frank, Cordray, English, and their supporters are high-fiving each other about how clever they are for trying to pull off this bit of skullduggery on Trump, they should consider that their victory – if such it be – will likely be very short-lived. As American Banker also pointed out, the judge who will hear English’s suit, Timothy J. Kelly, was recently appointed by Trump. You do the math. Trump will eventually name a permanent replacement – no doubt very quickly. And while the Democrats will surely do whatever they can to obstruct and delay the nomination – about the only thing they show any interest in or capability of doing – Trump will prevail in the end.

As I noted in my earlier column on the CFPB, I made clear my support for the agency and what it does, namely making sure that financial institutions don’t try to rip off their customers. But I drew a big fat line against the imperialistic behavior of Cordray, which apparently didn’t stop even on his last day in office. Now I’m starting to question whether or not this really is a rogue agency, as many of its detractors allege, and was intended to be so right from the start, as Mr. Frank basically admits.

As I said in my earlier column, “Cordray risks hurting that reputation [of the CFPB] with his imperial behavior.” If the CFPB is killed or defanged by Trump – and here’s hoping he doesn’t do that – Cordray and his confederates will have only themselves to blame.

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George Yacik
INO.com Contributor - Fed & Interest Rates

Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.