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Cordray tests Ohio's election waters amid concerns about consumer agency's future
September 4, 2017
CINCINNATI/WASHINGTON Sept 4 (Reuters) - The head of the U.S. consumer watchdog will discuss his agency’s work at one of the country’s largest Labor Day gatherings on Monday and simultaneously stoke major doubts about its future.
Democrat Richard Cordray, appointed head of the Consumer Financial Protection Bureau by former President Barack Obama, is widely expected to enter Ohio’s governor race in coming weeks. Many political leaders in Washington and Ohio say he is testing the waters for a campaign with Monday’s speech before a major Democratic constituency, a Labor Day picnic hosted by the AFL-CIO that typically draws crowds in the thousands.
To run in the 2018 election, Cordray must resign from the consumer bureau under a law banning public servants from using their offices for political gain. His term does not expire until next summer after Ohio Democrats select their gubernatorial nominee.
If Cordray leaves the CFPB, members of both parties expect Republican President Donald Trump to seize on the vacancy to fulfill his promises to slash regulations or even dismantle the agency, reviled by banks and conservatives.
What happens to the CFPB, established seven years ago to protect individuals against predatory lending, once Cordray resigns is an open question. There is no precedent for replacing its director, a powerful leader who both writes and enforces rules.
Cordray’s deputy has been in an “acting” role for a year, making him an unlikely successor. The agency has repeatedly declined to comment on resignation rumors.
“I am very clear that it is muddy,” said Richard Hunt, president and CEO of the Consumer Bankers Association, who closely tracks the agency.
CFPB critics who contend Cordray oversteps his authority and is not accountable to anyone say Trump should use a 1998 law to slide in a current administration appointee, already confirmed by Congress, as temporary director the moment Cordray resigns. A legal ruling that Trump can fire Cordray is currently under appeal.
It would be logical ”to go with a Senate-confirmed person who is already locked in,” said Kate Larson, who follows capital markets issues for the U.S. Chamber of Commerce.
That would block a Cordray loyalist from taking over and give a replacement nominee time for confirmation. Some say Treasury Secretary Steven Mnuchin could fill in alongside performing current duties.
Others hope Cordray will stay to defend CFPB from Trump, strengthen safeguards on mortgages and other debt, and continue cracking down on banks such as Wells Fargo & Co.
“He’s done a great job and I don’t think he should leave for any reason,” said Karl Frisch, executive director of the liberal group Allied Progress.
But CFPB’s mandate is part of federal law, said Dennis Kelleher, head of Better Markets, a Wall Street reform group.
“One would hope that the next director, who has to swear an oath to uphold the law and not just uphold Trump’s ideology, would follow the law,” he said. (Reporting by Lisa Lambert; Editing by Bill Trott)