{"id":44073,"date":"2017-09-28T12:22:53","date_gmt":"2017-09-28T16:22:53","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=44073"},"modified":"2017-09-28T12:22:53","modified_gmt":"2017-09-28T16:22:53","slug":"44073","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2017\/09\/44073\/","title":{"rendered":"CFPB Stays, But Cordray Goes"},"content":{"rendered":"<p style=\"margin: 0 0;\"><img loading=\"lazy\" decoding=\"async\" src=\"\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350.png\" alt=\"George Yacik - INO.com Contributor - Fed &amp; Interest Rates\" width=\"350\" height=\"131\" class=\"alignleft size-full wp-image-30496\" style=\"padding-top: 10px;\" srcset=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350.png 350w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350-300x112.png 300w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350-270x100.png 270w\" sizes=\"(max-width: 350px) 100vw, 350px\" \/><\/p>\n<p style=\"margin: 0 0;\"><br style=\"clear:both;\"><\/p>\n<p>The worst-kept secret in Washington is that Consumer Financial Protection Bureau Director Richard Cordray may be running for governor of Ohio. Whether that satisfies his political ambitions or not is unclear, given that if he wins he would have to answer to someone other than himself \u2013 the state\u2019s taxpayers \u2013 a position he doesn\u2019t seem comfortable with.<\/p>\n<p>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. 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\u2019s only gotten worse in the past few months as his tenure winds down.<\/p>\n<p>More seriously, his obstinacy, haughtiness, and lack of candor are likely to cost the agency a lot of goodwill and support in Washington, and possibly among the public. He owes it to the agency he helped build and supposedly loves to step down immediately before he creates more damage.<\/p>\n<p>Now comes word that Cordray\u2019s agency may have botched the Wells Fargo scandal \u2013 big time. Not only has there been previous evidence that the CFPB was lackadaisical in investigating the bank\u2019s sales practices, at least a year after the Los Angeles Times reported there were problems, but now a recently released internal memo shows that the agency\u2019s lawyers felt there was a strong justification to hit the bank with a $10 billion penalty, instead of settling for a paltry $100 million last September.<\/p>\n<p>What\u2019s up with that?<!--more--> <\/p>\n<p>A more cynical person than myself might think that Cordray wanted to make a big, headline-grabbing score against a major bank just before throwing his hat into the Ohio ring, instead of building a case for an even larger but more justified penalty, but one that would have likely provoked a battle that would have dragged on for a long time, certainly well past the Ohio gubernatorial election. Indeed, the CFPB\u2019s lawyers recommended a $100 million penalty to \u201chelp resolve this case,\u201d according to the memo, never mind the fact that the agency found \u201cmore than two million violations\u201d by Wells and its employees.<\/p>\n<p>While $100 million sounds like, and certainly is, a lot of money, and is far and away the CFPB\u2019s largest penalty to date, it had little effect on Wells\u2019 stock price, indicating it wasn\u2019t a meaningful event to the bank. So why did the CFPB settle for such a small sum, and why hasn\u2019t Cordray commented on it?  <\/p>\n<p>Actually, his silence is in keeping with his behavior over the past few months as he walks and talks like he\u2019s running for governor but doesn\u2019t have the decency\u2013 and yes, the obligation \u2013 to make that intent public and then resign as CFPB director.<\/p>\n<p>On Labor Day, he spoke at the annual AFL-CIO picnic in Cincinnati, extolling the virtues of the CFPB and the fine work it has done since its creation (and make no mistake, I have few objections about that. As I\u2019ve written before in this space, the CFPB plays an important consumer protection role, one that was long overdue. The power of the agency\u2019s director, however, needs to be overhauled, as Cordray\u2019s behavior so amply shows why).<\/p>\n<p>But when asked whether he plans to run for Ohio governor, Cordray said, \u201cI don\u2019t have anything to say about that,\u201d as if it was beneath him to answer further. He followed that up a week later with a speech at the Ohio Land Bank Conference in Cleveland on the same day as the Ohio Democrats\u2019 first gubernatorial debate.<\/p>\n<p>He\u2019s also blown off Congressional subpoenas and a request by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, to state whether he plans to stay at the agency or not, a legitimate question. Cordray\u2019s response has basically been to flash Hensarling the middle finger.<\/p>\n<p>While Cordray is hardly the first politician or government official to play cute about his greater political ambitions or intentions, he\u2019s playing politics with his agency\u2019s rulemaking. That\u2019s certainly not unheard of either, but it particularly goes against the CFPB\u2019s very being. <\/p>\n<p>Remember that the CFPB\u2019s creation and authorization in the Dodd-Frank Act deliberately put it outside the Congressional budgetary process, leaving it reliant on funding not from politicians and lawmakers but from the Federal Reserve, which is also supposed to be \u201cindependent\u201d from political influence. <\/p>\n<p>Those intentions might be idealistic and a convenient fiction, but they are important in keeping the CFPB above politics and shielded from outside influence, meaning from financial institutions. Ironically, it\u2019s the agency\u2019s director who is playing politics with it, as the Wells case may show, even as he goes through the pretense that\u2019s he\u2019s not.<\/p>\n<p>While Cordray may believe the CFPB\u2019s charter puts him above Congress \u2013 which it hardly does, given that the agency was created by Congress \u2013 he still answers to the taxpayers, and according to some recent surveys, they still largely support the agency and its work. But Cordray risks hurting that reputation with his imperial behavior. <\/p>\n<p>Visit back to read my next article! <\/p>\n<p><a href=\"http:\/\/www.ino.com\/blog\/meet-george-yacik\/\" target=\"_blank\">George Yacik<\/a><br \/>\nINO.com Contributor - Fed & Interest Rates<\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">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.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>The worst-kept secret in Washington is that Consumer Financial Protection Bureau Director Richard Cordray may be running for governor of Ohio. Whether that satisfies his political ambitions or not is unclear, given that if he wins he would have to answer to someone other than himself \u2013 the state\u2019s taxpayers \u2013 a position he doesn\u2019t [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[9124,9119,9122,9120,8929,9121,9125,9118,6058,9123],"class_list":["post-44073","post","type-post","status-publish","format-standard","hentry","category-ino-com-contributors","tag-afl-cio-picnic","tag-cfpb-director","tag-congressional-budgetary-process","tag-congressional-subpoenas","tag-consumer-financial-protection-bureau-cfpb","tag-dodd-frank-act","tag-ohio-gubernatorial-election","tag-richard-cordray","tag-wells-fargo-nysewfc","tag-wells-fargo-scandal"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - 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