Richard Cordray, the first appointed director of the Consumer Financial Protection Bureau, will resign by the end of the month, he said in an email to employees at the agency.
The Bureau was created in the wake of the financial crisis and is charged specifically with protecting consumers from abuses by banks and other financial companies. It is widely reviled by Republicans and the financial services industry. Cordray, one of the last remaining Obama appointees to head a major regulatory agency, is rumored to be interested in entering the 2018 Ohio governor's race.
"Director Cordray stood-up a fully functioning federal agency, finalized rules overhauling the residential mortgage industry, and introduced the first federal standards for payday lending," Isaac Boltansky, an analyst at Compass Point said in a note.
The agency, known as the CFPB, has been controversial since its inception as part of the 2010 Dodd-Frank Act, which overhauled how the federal government regulated and oversaw the financial industry.
"Together we have made a real and lasting difference that has improved people’s lives," Cordray said in his message to staff.
To its supporters, the CFPB was one of the few — and maybe only — financial regulators that was primarily concerned with the welfare of consumers, as opposed to the health and soundness of banks and other financial institutions.
Cordray had previously been attorney general of Ohio. While he did not address his future plans in the email to CFPB staff, he did say "there is always more work that lies ahead."
Cordray's opponents in Congress and the financial services industry saw the CFPB as an unaccountable bureaucracy whose rules harshly punished companies, saddled them with compliance costs, and made it more expensive for them to provide credit and other services to consumers.
One of Cordray's last major efforts at the agency — a rule that would ban financial services companies from requiring consumers to go to binding arbitration when disputes arose —was struck down recently by party-line votes in Congress and by President Trump. The rule was opposed by the Treasury and the Office of the Comptroller of the Currency, both of which are run by Trump appointees.
In October, the CFPB finaliazed rules that would severely restrict the short-term and payday loan industries.
Trump has largely appointed bank-friendly figures to head up financial regulators, leaving Cordray as something of a glaring exception to the new, bank-friendly environment in Washington.
While it will likely take months to appoint and confirm a new director, Trump could immediately put his stamp on the Bureau by picking someone who has already been confirmed by the Senate to fill-in for Cordray temporarily before appointing a full-time director.
"The Administration will announce an acting director and the President's choice to replace Mr. Cordray at the appropriate time," Raj Shah, the White House deputy press secretary, said in a statement.
"The CFPB will face substantive changes in the years ahead as policymakers recalibrate the regulatory environment, but Director Cordray's work ensures that the Bureau will continue to play a fundamental role in the consumer finance ecosystem for the foreseeable future," Boltansky wrote.
Here is the full letter Richard Cordray sent to CFPB staff:
Dear Colleagues,
I wanted to share with each of you directly what I have told the senior leadership in the past few days, which is that I expect to step down from my position here before the end of the month.
As I have said many times, but feel just as much today as I ever have, it has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here. Together we have made a real and lasting difference that has improved people’s lives, notably: $12 billion in relief recovered for nearly 30 million consumers; stronger safeguards against irresponsible mortgage practices that caused the financial crisis and hurt millions of Americans; giving people a voice by handling over 1.3 million complaints that led to problems getting fixed for vast numbers of individuals, and creating new ways to bring financial education to the public so that people can take more control over their economic lives. None of this could have happened without all of us being dedicated to pull together in supporting and protecting people and making every consumer count. I will always be immensely proud of you and what you have done.
At the same time, there is always more work that lies ahead. That would be true at any point, of course, and one thing I have tried to reinforce this year is that the Consumer Bureau is far more than its director. I am confident that you will continue to move forward, nurture this institution we have built together, and maintain its essential value to the American public. And I trust that new leadership will see that value also and work to preserve it – perhaps in different ways than before, but desiring, as I have done, to serve in ways that benefit and strengthen our economy and our country.
My gratitude and appreciation for what you mean to me and to our nation is deep and lasting, and I will be taking the opportunity to make that clear to you in person over the days ahead.
Thank you!
RC