Nation

The White House is considering firing this guy, but it’s complicated

Richard Cordray, the director of the Consumer Financial Protection Bureau.
Gabriella Demczuk/The New York Times
Richard Cordray, the director of the Consumer Financial Protection Bureau.

WASHINGTON — Richard Cordray is the federal watchdog with the biggest target on his back in President Trump’s Washington.

Cordray heads the consumer lending bureau championed by Senator Elizabeth Warren, and the White House is actively weighing whether Trump should fire him, according to Republican congressional aides and lobbyists who are in contact with the administration about Cordray’s fate.

“They want to fire him. Their legal counsel are looking at every angle,” said one well-connected lobbyist.

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It is a move that many Republican lawmakers are urging, but it also gives some White House advisers pause for the potential of a backfire within Trump’s own populist base.

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The independent agency Cordray runs, the Consumer Financial Protection Bureau, has been a Washington piñata since congressional Democrats and President Obama created it as part of the 2010 Dodd-Frank financial reform law. Its job is to regulate mortgages and other consumer loans and protect small-time borrowers from predatory lending practices.

And now that Republicans control most levers of power in Washington, the agency presents a fat target for conservatives who view it as a glaring example of unwarranted economic meddling and regulatory overreach. A key step, in their eyes, would be canning Cordray, a close Warren ally and the agency’s chief since 2012.

Two GOP aides on Capitol Hill said that their understanding is that all options are on the table as the White House deliberates, including dismissing Cordray. Reflecting the fluid nature of the debate, one GOP senator, speaking on condition of anonymity, said his understanding was that the Trump administration was “trying to work toward an amicable separation.”

The CFPB declined to make Cordray available for an interview or otherwise comment on his fate. The White House did not respond to multiple requests for comment.

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“We’ll see where we go,” White House press secretary Sean Spicer said this month when asked whether Trump would fire the CFPB chief.

Politics and legal issues make firing Cordray more complicated than a typical changing of the guard with a new president. The agency is independent, and Cordray enjoys an appointment that does not end until 2018. That means Cordray cannot be dismissed at Trump’s whim.

Under the law that created the agency, the president can dismiss the director only for “inefficiency, neglect of duty, or malfeasance.” That language is why White House lawyers are combing through Cordray’s five-year record as the agency’s chief, looking for infractions that could justify his dismissal, sources said

In October, a three-judge panel said restricting the president’s power to fire the CFPB director was unconstitutional — a decision that some critics took as leeway to fire Cordray. But on Thursday, Cordray may have won more time when the US Court of Appeals wiped out the ruling. Now the case heads to the full, 10-judge court. A hearing is set for late May.

“For months, congressional Republicans have been attacking the CFPB, hiding behind a flawed court decision that was vacated [Thursday],” Warren said in response to the appeals court decision. “Now they have to stop pretending their attacks on Director Cordray and the agency are about anything other than carrying water for big banks, payday lenders, and debt collectors.”

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Cordray, a mild-mannered former Ohio attorney general and five-time “Jeopardy!” champion, has been every bit as aggressive as financial firms feared. Warren — who oversaw formation of the agency before she was a senator — recruited Cordray to the agency in 2010 to set up its enforcement division. She blessed Obama’s decision to tap him for the top job after she didn’t get it.

The bureau has issued sweeping new mortgage-lending rules, curbing what it deemed abusive practices such as charging hefty fees and forcing lenders to do more to make sure borrowers can pay back loans. It’s also been an aggressive cop on the beat, with its enforcement actions resulting in firms paying out close to $12 billion in the form of forgiven debts and refunds to 29 million consumers.

Republicans opposed the agency from the start, and say under Cordray it has overreached and made it harder for hard-working people to get credit. They also contend it’s too powerful and not appropriately accountable to the president or Congress. They want its budget to come from Congress, instead of the Federal Reserve.

“The CFPB has done some things that are good, and they’ve done some things . . . that are really bad policy-making. There are counties in Nebraska where you really can’t get a mortgage, and it’s because of CFPB and larger Dodd-Frank overregulation,” said Nebraska Senator Ben Sasse, another Republican urging Trump to get rid of Cordray. He said his main problem is with a director who isn’t accountable to the president or Congress: “If people in Nebraska have a problem that’s actually created by bad policy-making by the CFPB, who do they complain to? Who really has the power? He doesn’t report anywhere.”

Competing camps have developed within the administration on the issue, according to lobbyists who are closely watching developments. One side is pushing for the president to remove Cordray immediately.

Another side in the internal White House debate is cautioning that firing Cordray would cause unnecessary political turmoil, impeding the administration's other priorities. The thinking of this camp is that Trump would be able to replace Cordray with much less drama when his term expires in July 2018, and Republicans could, in the meantime, make his life difficult in hopes that he leaves earlier. There’s some speculation that Cordray may want to return to his home state of Ohio to run for governor in 2018.

Firing Cordray would provoke a populist storm from the left, especially from Warren. Warren’s rise was helped along by the very public campaign she waged for Congress to create the CFPB as part of Dodd-Frank. She lobbied hard to become its first director. When the Obama White House spurned her, it launched her on her path to run for US Senate, ultimately defeating Republican Scott Brown.

Democrats are already laying the groundwork to portray Trump’s efforts to weaken the CFPB as evidence that he is betraying the populist promises he made during the campaign to crack down on Wall Street. Senate Democrats released a video that featured Trump’s railing against Wall Street investors and hedge fund managers, interspersed with Democrats including Warren and Vermont Independent Bernie Sanders pointing out how he’s now doing the opposite by stocking his administration with industry insiders and pledging to roll back Dodd-Frank.

“He’s already attacking the Consumer Financial Protection Bureau, which holds powerful people accountable when they rip you off,” Warren says in the video. “That’s a broken promise.”

Victoria McGrane can be reached at victoria.mcgrane@globe.com. Follow her on Twitter @vgmac.