Update: CFPB Director Richard Cordray Resigns
11/15/2017 4:00 PM
Cordray says he will step down by the end of the month.
Less than a year before his term expires, CFPB Director Richard Cordray on Wednesday ended several months of speculation about his future with the bureau by announcing his resignation in an email memo to the bureau’s employees.
"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,” Cordray wrote in the email, CNBC reports.
Under Director Cordray, who will vacate the office by the end of the month, the CFPB was frequently criticized over the way it carried out its regulatory, supervisory and enforcement authority. It has been a tough year for Cordray, whose bureau was heavily criticized in a report released earlier this year by the Secretary of the Treasury, and later faced a significant upset when President Donald Trump signed legislation repealing the CFPB’s mandatory arbitration rule.
Of the resignation, ACA International President Rick Perr released the following statement: “ACA International looks forward to working with a new director of the CFPB and demonstrating the important role that debt collectors play in the financial services market. We are committed to collaborating with the CFPB’s future leadership to ensure any new policies and regulations impacting the credit and collection industry are evidence-based, well-reasoned and fair.”
Cordray’s fate at the CFPB has been the source of intense speculation, with many believing Cordray had his sights set on entering the gubernatorial race in Ohio, where he previously worked as attorney general. Under the Hatch Act, which governs political activity of federal civilian executive branch employees, Cordray could not legally file for candidacy while employed by the CFPB.
Even members of Congress, especially one of Cordray’s top critics, U.S. Rep. Jeb Hensarling, R-Texas, have pressed the director for a statement about his plans to continue at the CFPB for much of this year as well—to no avail.
“You ask whether I intend to serve my full statutory term,” Cordray said in a letter to Hensarling, chairman of the House Financial Services Committee in August, Reuters reports. “At this time, I have no further insights to provide on that subject.”
Although Cordray has not yet publicly declared his intentions to enter the Ohio governor race, the filing deadline for gubernatorial candidates in Ohio is Feb. 7, 2018. Cordray, who was appointed by President Barack Obama to serve as the CFPB’s first director in January 2012, was facing the expiration of his term in July 2018.
The White House issued a statement on a replacement for Cordray.
"The administration will announce an acting director and the president's choice to replace Mr. Cordray at the appropriate time," said Raj Shah, deputy White House press secretary, according to The Los Angeles Times.
The timing of Cordray’s resignation can have significant implications for the credit and collection industry. While the CFPB has publicly stated its hope to release the narrower third-party debt collection proposed rule by the end of this year, Cordray’s resignation – coupled with the CFPB’s planned debt collection disclosure research that has not yet even begun – makes this timeframe unlikely.
In any case, it is now clear that there will not be a final debt collection rule under Director Cordray. This transition provides the debt collection industry with an important opportunity to engage with the CFPB under new leadership and to shape any forthcoming rules so that they are appropriately tailored, based on robust research, and fit within President Trump’s regulatory agenda.
On the legislative front, the single-director structure of the CFPB was the source of substantial criticism during Cordray’s tenure. Legislative proposals to implement a bipartisan commission at the CFPB or to make the agency’s director subject to removal by the president “at will” rather than for cause were being pushed by members of Congress. In fact, the latter is one of the key components of H.R. 10, The Financial CHOICE Act, sponsored by Hensarling. H.R. 10 was approved by the House of Representatives.
ACA International is continuing to work on coverage of this developing story.
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