A day after two Republican senators petitioned President-Elect Trump to dismiss Consumer Financial Protection Bureau Director Richard Cordray after taking office, several House Democrats wrote to the president-elect opposing such a move.
The House Financial Services Committee members pointed out that “no president has ever removed a head of an independent agency for cause” and that such an attempt would likely lead to lengthy litigation. They further said that “any attempt to dismiss Director Cordray from his position at the bureau should be seen as an effort to delay or otherwise thwart” the CFPB’s current rulemaking efforts on payday lending and arbitration.
While the Dodd-Frank Act states that the CFPB director may be removed only “for cause” and not at the discretion of the president, a recent ruling by a federal judge in PHH Mortgage v. CFPB invalidated the CFPB’s leadership structure, highlighting the dangers of a single, unaccountable, unchecked director. Under the ruling, the president now has the power to remove the director, pending an appeal of the case by a higher court.
ABA has long supported a consumer protection agency led by a bipartisan, five-member commission to balance independence and accountability while broadening perspectives and promoting checks and balances, and will continue to monitor the PHH case as the appeal proceeds.