Our Editorial: CFPB should be brought into the fold

The Detroit News

As a reminder, non-elected government officials are not the president of the United States, and have no authority to control the levers of government after they leave their posts.

That’s what Richard Cordray attempted to do when he departed as head of the Consumer Financial Protection Bureau to make an expected bid for governor of Ohio as a Democrat.

Cordray, an Obama appointee, wanted to limit President Donald Trump’s ability to change the direction of the bureau by naming his own successor to the watchdog agency.

In doing so, he helped create a banana republic scenario in which two individuals showed up for work for the same job, claiming the same powers.

Thankfully, the courts stepped in quickly, and clarified the situation. On Tuesday, a federal judge ruled in favor of the White House, giving the Trump administration the green light to oversee the agency. But, of course, that decision is likely to be appealed.

Cordray, who has headed the CFPB since its formation under the Dodd-Frank law in 2010, appointed a top aide, Leandra English, as deputy director before he resigned, and instructed her to take over as acting director when he left.

Trump, citing his powers under the Federal Vacancies Reform Act, named his budget director, Mick Mulvaney, as interim head of the agency. English filed a federal suit contending under the language of Dodd-Frank, she has the right to serve until the president names a permanent head who is confirmed by the Senate.

It was a shady move by Cordray meant to undermine Trump’s ability to reform a bureau that has already been ruled unconstitutional by a federal appeals court panel.

The president has criticized the CFPB for a too-heavy regulatory hand that has damaged the nation’s financial institutions.

Given the previous ruling by the Washington, D.C., 10th Circuit panel, which is under review by the full court, it’s not surprising the leadership dispute was resolved in Trump’s favor.

Agencies should not have the ability to perpetuate their own agendas and work against elected leaders.

Opponents of the CFPB argued successfully in the initial case that it differs from similar agencies, such as the Securities and Exchange Commission and Federal Communications Commission, in that it is controlled by a single director who is subject to almost no oversight. The FCC, SEC and others have multi-person boards or commissioners empowered to check the director.

The appeals court dealt specifically with the leadership structure of the bureau, writing: “Because the Director alone heads the agency without Presidential supervision, and in light of the CFPB’s broad authority over the U.S. economy, the Director enjoys significantly more unilateral power than any single member of any other independent agency.”

Cordray has used that power to arbitrarily increase fines against financial institutions, which brought about the initial lawsuit.

Dodd-Frank also opened the federal treasury to the CFPB, allowing it to set its own budget.

A pending Republican replacement of Dodd-Frank would make the CFPB director, who now enjoys a five-year term and can only be removed for cause, fireable at will, just like all other presidential appointees.

The Consumer Financial Protection Bureau was one of the worst ideas to emerge from Dodd-Frank, a package that was chock-full of bad policies.

It should be made to conform with the normal structure of federal agencies, and given some direct oversight. That starts with the president deciding who fills the leadership vacancy.