On the same day that House Democrats wrote to President-elect Donald Trump to defend controversial Consumer Financial Protection Bureau Director Richard Cordray, two Republican senators sent a letter to Vice President-elect Mike Pence to press for his removal.  The letter, signed by Ben Sasse (Neb.) and Mike Lee (Utah), requested that Trump dismiss Cordray “promptly after his inauguration.”

The senators immediately qualified the CFPB as “unconstitutional,” and stated that Cordray’s removal would align with Trump’s Presidential oath to “preserve, protect, and defend the Constitution of the United States.”  According to Sasse and Lee, removing Cordray would rein in the agency, as the CFPB has “pursued a regulatory agenda that is harmful to the American people.”  Citing the checks and balances built into the Constitution, the letter argued that agencies have wielded increasing power in the past 80 years – a shift that is inconsistent with the Framers’ intent.

The letter referenced favorably the D.C. Circuit’s decision in PHH Corporation v. CFPB, and quoted its characterization of the CFPB Director as the “single most powerful official in the entire United States Government.”  Like the D.C. Circuit, the two senators called into question the structure of the CFPB as designed by the Dodd-Frank Act, noting that the CFPB gets its funding from the Federal Reserve instead of Congress and has its power vested in a single person rather than a multi-member panel.  The letter further emphasized the President-elect’s constitutional authority to remove the Director.

The two Republicans also argued that Cordray’s agenda at the CFPB has harmed the American people, calling his tenure “disastrous,” and quoted the President-elect’s own website when describing the CFPB’s initiatives as unnecessary and symptomatic of a bloated government.  The letter hit directly at regulations issued by the Bureau, contending that its rules “have disproportionately burdened credit unions and community banks” and characterizing the forthcoming CFPB rule on arbitration as “based on flawed research.”

Finally, the letter closed with an echo of Trump’s campaign promises to decentralize power from the select few in D.C. and restore power to the American people.  “[T]he CFPB’s structure is based on the idea that government is unlimited and rights are dependent on the special dispensation of the experts who know better than the American people.”  The removal of Director Cordray would represent the “first marker in the long process of rolling-back an agency that combines the powers of the executive, legislative, and judicial branches into the hands of a few unaccountable Washington elites.”

Even without the PHH decision, the President probably has authority to fire the Director “for cause.”  A new Director could order a halt to litigation and enforcement proceedings, whether pending or threatened.  Any final regulations already in place cannot be formally withdrawn except by the rulemaking process.  Their enforcement, of course, could be halted by a new Director.  But for any proposed regulation that is finalized in the upcoming few weeks, the Congressional Review Act can be used to reverse.

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Photo of Ashley L. Taylor, Jr. Ashley L. Taylor, Jr.

Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations…

Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.

Photo of Brooke Conkle Brooke Conkle

Brooke Conkle offers consumer-facing companies compliance counseling and litigation services to help them address federal and state consumer protection laws. Recognizing the challenges facing financial services companies, she provides in-depth analysis of complex issues related to consumer protection and compliance.

Photo of Keith J. Barnett Keith J. Barnett

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts…

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.