Legal Newsline

Thursday, December 12, 2019

When, how or will Trump change consumer protection bureau's leadership

By Jessica Karmasek | Feb 27, 2017


WASHINGTON (Legal Newsline) - A month into Donald Trump’s presidency and Richard Cordray remains the head of the Consumer Financial Protection Bureau, considered a thorn in the side of many Republicans.

Trump, who has been busy issuing various executive orders, hasn’t yet given Cordray, a former Ohio attorney general and Democrat, the boot, and some experts say they’re surprised.

Joseph Rubin, a self-described 20-year public policy veteran, said he is in that camp -- and that he’s surprised Trump hasn’t yet even indicated whether he plans to remove Cordray from his post.

“I think that’s obviously the million-dollar question now: what will happen to Cordray?” Rubin said in a recent interview with Legal Newsline. “Why hasn’t [Trump] fired him yet? What is he waiting for?”

Rubin, senior counsel at Arnall Golden Gregory LLP, focuses his practice on crisis management, technology, financial services, data security, privacy, hospitality industry and government affairs.

According to his bio, he advises clients on all aspects of the public policy cycle, from public affairs and crisis management to Congressional, Federal Trade Commission, Consumer Financial Protection Bureau and Department of Transportation investigations, and from legislation to rule making to implementation.

“We do a lot of work with clients with the CFPB,” Rubin explained. “So we regularly work with [the CFPB] on compliance issues and enforcement matters. We have a lot of interaction with [the bureau].”

Rubin said his firm also has been working with the president’s transition team.

“So I have a little bit of insight into what they’re thinking about,” he said.

Rubin said Cordray’s removal could go a couple of different ways.

“I think there’s been a lot of speculation as to whether Trump will try to remove him, and I think the expectation is that he probably will,” he said. “But I think there are different scenarios.

“Does he do it based on the PHH case? Does he do it based on cause? Does he force him to resign?”

Rubin said some have speculated that maybe Trump is waiting for the PHH case to be decided.

Last week, the U.S. Court of Appeals for the District of Columbia Circuit granted the CFPB’s petition for rehearing en banc -- or a rehearing by the full court -- of the October 2016 panel decision in CFPB v. PHH Corporation.

Among other things, the panel had declared the bureau’s single-director structure unconstitutional and would have allowed the president to remove the director at will rather than “for cause,” as set forth in the Dodd-Frank Act.

Now, with the bureau’s petition for rehearing being granted, the panel’s judgment is vacated and the full D.C. Circuit will hear PHH’s appeal of a $109 million penalty imposed by the bureau under the anti-kickback provisions of the Real Estate Settlement Procedures Act, or RESPA.

Oral argument has been scheduled for May 24.

Rubin said Trump also may be waiting until the current backlog of cabinet secretaries, along with his U.S. Supreme Court pick, has cleared.

“That way a new director could come in pretty quickly,” Rubin said.

“But maybe he just plans to let Cordray stay, and in July 2018 (when his term expires) he’ll move to reverse the decisions of the CFPB.”

Rubin pointed to comments Gary Cohn, director of the White House’s National Economic Council, recently made to the Wall Street Journal about Trump’s plans for the CFPB.

Cohn told the Journal that the White House could rein in the bureau simply by replacing Cordray with someone else. “Personnel is policy,” he told the newspaper.

“Basically he’s saying it really doesn’t matter, once we get our person in there,” Rubin said of Cohn’s comments.

But how will Trump go about replacing Cordray, if that’s what he does, indeed, decide?

“With a recess appointment? Or maybe he tries to get his pick through the Senate confirmation process,” Rubin said.

Either way, the leading candidates for the job appear to be former U.S. Rep. Randy Neugebauer, R-Texas, or Todd Zywicki, an economist and professor at George Mason University, Rubin said.

“Both are very strong critics of the CFPB and both have called for changing the CFPB to a commission,” he explained.

In a commission, the director would serve as the chairman and some sort of quorum would be required. More importantly, the structure would mean no one person would have nearly unlimited authority, Rubin said.

“Decisions of the bureau likely would be more bipartisan,” he explained. “Or at least issues would be considered from different perspectives.”

Making the change to a commission also would benefit consumers, Rubin noted.

“I think you’d see a number of changes,” he said. “Some of the pending rules on arbitration and small-dollar lending would be pulled back. You would see more openness in how decisions are made.

“Right now, we often don’t see changes in policy until they’re announced. So I think you would see more transparency, more opportunities for input.”

Consumers also would have more borrowing options, Rubin said.

“Online lenders, for example, I think, would have more opportunities to reach out to consumers directly than they do now,” he said.

Overall, consumers would see more innovation and have more products to choose from, he said.

“I think the CFPB (if it made the change to a commission) would continue to protect consumers and engage in consumer protection, but it would look at it from a different perspective,” Rubin said.

“It would look at consumer harm and specific harm. It would look at balancing costs and benefits. Is a particular activity that a company is allegedly engaged in really harmful to consumers? Or is it just the market?”

While Congress has taken it upon itself to recently introduce certain measures to dismantle or limit the CFPB’s power, Rubin said he thinks it’s unlikely any legislation will pass ahead of presidential action.

“The likelihood of legislation passing -- even with a GOP majority -- before anything is changed at the top is very unlikely,” he said, noting the legislative process.

From Legal Newsline: Reach Jessica Karmasek by email at

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Organizations in this Story

Consumer Financial Protection BureauWhite HouseWall Street JournalU.S. Court of Appeals for the District of Columbia Circuit