Why Hasn't Trump Fired CFPB's Cordray?

Another day, another Trump administration official fired or threatened with firing. That’s what political news has seemed like for the past few weeks. But almost as fascinating as the ousters is the puzzling staying power of one Obama holdover, despite calls for his removal from both Trump’s supporters and critics within the GOP.

The latest to join the chorus is former Trump campaign manager Corey Lewandowski, who told “Meet the Press” host Chuck Todd in late July that firing Cordray was a necessary step in “making sure the president’s agenda moves.”

Lewandowski joins two of Trump’s biggest Republican critics in advocating that the president take this action

Consumer Financial Protection Bureau Director Richard Cordray has stayed in his job so far in the Trump administration, despite calls for his firing by both President Trump’s supporters and critics in the GOP. A federal court called the CFPB’s actions against financial services company PHH a violation of  “Rule of Law, 101.” (Photo by Alex Wong/Getty Images)

Sen. Ben Sasse (R-NE), who has warned Trump against firing Attorney General Jefferson Sessions, tweeted in January that “it’s time to fire ‘King Richard.’” Around the same time, Sen. Mike Lee (R-UT), who opposed Trump’s presidential nomination all the way up to the Republican convention, stated: “Considering the damage CFPB has done to credit unions and community banks, President Trump should act quickly to remove the director.”

In a joint letter, Sasse and Lee urge Trump to remove Cordray because Cordray “has pursued costly regulatory policies that are radically opposed to the Trump Administration’s pro-growth agenda.” As they point out, CFPB regulations have disproportionately burdened small banks and credit unions. Furthermore, the CFPB’s ban on arbitration clauses in credit product agreements is based on “flawed research.”

To a large extent, Cordray has been empowered by the CFPB’s glaring lack of accountability. The Dodd-Frank financial overhaul law created the CFPB as an entity subject to no meaningful oversight by Congress, as its funding comes not from appropriations, but a fixed amount from what the Federal Reserve takes in selling dollars. And Dodd-Frank gives the CFPB director a five-year term, restricting the president from removing the director except for “inefficiency, neglect of duty, or malfeasance in office.”

Last fall, a three-judge panel of the United States Court of Appeals for the District of Columbia ruled that the president has the constitutional power to fire the CFPB director “at will,” in the same way he can remove a Cabinet secretary without cause. That ruling has been vacated because the full appeals court is now considering the case, but Sasse, Lee, and various legal scholars argue the ruling still empowers Trump to fire Cordray until and unless it is overturned. “Like all government officials, the president is sworn to uphold the Constitution and is not duty-bound to respect unconstitutional statutes,” Sasse and Lee write.

In addition, Cordray’s abuses as CFPB director merit his firing even under the strict conditions set forth by Dodd-Frank. He has violated the due process right of the firms and individuals he regulates, approved excessive spending on renovations for the CFPB’s office building, and ignored Congressional subpoenas for information on the CFPB’s operations.

On August 4, leaders of the House Financial Services Committee made the case for holding the CFPB in contempt of Congress for violating subpoenas related to the arbitration rule. The committee’s report charges that the CFPB has repeatedly refused to hand over documents related to the rulemaking that the committee has requested in several subpoenas.

The CFPB has gone after financial services companies PHH and Ocwen retroactively for actions the firms took years earlier, when both were under the jurisdiction of other agencies. In the PHH case, in which the court found the CFPB’s structure to be unconstitutional, the court also ruled that the CFPB’s retroactive application of its new interpretation of the law, coupled with the massive fine, violated the Constitution’s guarantee of due process and flunked “Rule of Law, 101.”

Then there are the widespread complaints of discrimination that cast a pall over CFPB operations. According to a recent survey by the Government Accountability Office, 25 percent of the CFPB’s female, African American, and Asian American employees say they’ve experienced discrimination at the CFPB. “Under Cordray, the CFPB has become a breeding ground for structural inequality, where federal employees are treated differently based on immutable qualities despite the (ironic) fact that the agency vows to ‘outlaw discrimination in consumer finance,’” notes Gregory T. Angelo, president of the Log Cabin Republicans.

Taken together, Cordray’s actions, combined with his apparent inaction on discrimination complaints and other serious matters, are more than enough grounds to fire him for inefficiency, neglect of duty, malfeasance, or all three.

If President Trump fires Cordray and lays out the case for doing so, it would help unify the Republican Party and earn him thanks from countless consumers and entrepreneurs.