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Richard Cordray's Resignation Was Worth About $166 Million To Investors In Companies Tangling With The CFPB

Regulation in dollars and cents.

Posted on November 15, 2017, at 6:08 p.m. ET

Richard Cordray, the director of the Consumer Financial Protection Bureau, said Wednesday that he would resign by the end of November.
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Richard Cordray, the director of the Consumer Financial Protection Bureau, said Wednesday that he would resign by the end of November.

Richard Cordray is leaving the Consumer Financial Protection Bureau at the end of the month, and some of the companies entangled in suits or investigations with the agency breathed a sigh of relief Wednesday — or at least their shareholders did.

The CFPB's current investigations and litigation could be affected by the departure of Cordray, an Obama appointee, particularly if he is replaced with a more industry-friendly director. Under new leadership or even just without Cordray at the helm, the consumer watchdog agency could settle or even abandon some of its outstanding litigation, Isaac Boltanksy of Compass Point said in a note Wednesday.

Here are some of the companies that could benefit from a less aggressive CFPB:


Navient

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The student lender and servicer was sued by the CFPB in January. The Bureau alleged that the company systematically misled borrowers, mismanaged student loan payments, and steered students into unfavorable repayment plans. Navient's shares rose from $12.21 right before news of Cordray's resignation to $12.61 at the end of the day, a 3.3% jump that added $105 million in value to the company. A Navient spokesperson did not respond to a request for comment.


World Acceptance Corporation

Google Finance

The installment lender has disclosed in its financial reports that the CFPB staff "is considering recommending that the CFPB take legal action against the Company." In 2014, the company got a notice that the CFPB was looking into whether it "has been or is engaging in unlawful acts or practices in connection with the marketing, offering, or extension of credit in violation.”

The company's shares jumped after the Cordray news hit the wires, rising from $71.52 at 11:50 a.m. to $76.12 at the market close, a 6.4% jump that added around $40 million to the company's value. "A shift in CFPB leadership would conceivably lower the odds of an enforcement action," Boltansky wrote. The company did not respond to a request for comment.

Ocwen

Google Finance

The CFPB sued Ocwen, a mortgage servicing company, in April, alleging that the company's servicing was ridden with errors, including not properly crediting mortgage payments and illegally foreclosed on borrowers. The company's shares rose from $3.01 at 11:50 a.m. to hit an intraday high at $3.16 before closing with $3.08, an overall 2.3% gain that increased the company's value by about $9 million. The company did not respond to a request for comment.

TCF

Google Finance / Via finance.google.com


The CFPB sued TCF, a Minnesota-based bank, earlier this year for allegedly steering customers into buying overdraft protection, which helped the bank reap big fees. The suit was slimmed down by a federal judge in September but is ongoing. Boltanksy wrote that the suit against TCF was the most likely to be settled.

The company's shares were at $18.18 at 11:50 a.m. and subsequently rose to an intraday high of $18.48 before closing at $18.25, a .4% jump that added $12 million to the company's market value.

"We will continue to work through the legal process," Mark Goldman, a TCF spokesperson told BuzzFeed. "We remain confident that the way we provided our overdraft program to our customers complied at all times with the letter and spirit of applicable laws and regulations."

Molly Hensley-Clancy contributed reporting to this story.

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