The Wall Street Journal’s editorial board joined Republican senators in urging the president-elect to fire the director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, for “a menu of reasons” ranging from the agency’s crackdown on racial prejudice in auto loans to the cost of building renovations.
The CFPB was set up in the wake of the financial crisis as part of a new regulatory network constructed by the Dodd-Frank Act and has been a target of conservative media misinformation ever since, most of which has focused on the agency’s supposed overreach in protecting American consumers from predatory corporate behavior. The Journal’s editorial on January 9 calling on Donald Trump to fire Cordray “for cause” after Trump assumes the presidency followed calls for Cordray’s termination by Republican Sens. Mike Lee (R-UT) and Ben Sasse (R-NE). Among the reasons the Journal claimed as justification for Cordray’s termination was the CFPB’s allegedly poor handling of anti-discrimination regulations, its supposed failure to comply with Freedom of Information Act (FOIA) requests, and reports of racial and gender discrimination from CFPB employees. From The Wall Street Journal:
Meantime, Mr. Trump should fire Mr. Cordray for cause, and the President-elect has a menu of reasons. Take a CFPB auto-loan campaign, which involved guessing the race of a borrower by his last name, and then suing banks that seemed to offer better deals to people the government assumed are white. A House Financial Services Committee report detailed how Mr. Cordray and senior officers knew their statistical method was “prone to significant error” but hid that reality from the public.
Mr. Cordray’s bureau routinely fails to show the reasoning behind its rules. In December the Cause of Action Institute filed a lawsuit against CFPB for refusing to produce more than 1,800 pages of documents on how the agency came up with a regulation on arbitration. Such disclosures are required by the Freedom of Information Act.
An investigation of CFPB employment practices by the Government Accountability Office found that a quarter of black, Asian and female respondents reported that they had been discriminated against. About 10% claimed to have personally observed retaliation against another employee. The bureau neglected to fulfill seven Inspector General recommendations in this area. Mr. Cordray also stood by while a CFPB office renovation notched more than $100 million in cost overruns.
The Journal’s supposed evidence that the CFPB is a “lawless and unprofessional agency [that] deserves a dose of political accountability” does not hold up to scrutiny.
The Journal has attacked the CFPB before for standing up to discrimination in auto lending after the agency drafted new guidance on interest rate markups and facilitated compensation for American consumers who had been the targets of discrimination. In November 2015, the Center for Responsible Lending concluded that the CFPB’s regulatory changes had the added benefit of saving all consumers money. The Journal's complaint that CFPB is not forthcoming enough with FOIA requests specifically cites a lawsuit from Cause of Action, a Koch-funded front group. The editorial’s allegation of rampant discrimination at the agency also ignored that it was the CFPB that initiated a self-assessment of its employee evaluations, as part of the “standards for equal employment opportunity” mandated by Dodd-Frank, and the Government Accountability Office (GAO) report alluded to by the Journal actually found that the agency “has worked to strengthen personnel management practices and enhance its diversity and inclusion efforts.” Even the Journal’s accusation of mismanagement and cost overruns in the agency’s office renovation falls flat: The Federal Reserve Inspector General found that “construction costs appear reasonable” and that the agency’s building “costs are below the amount previously budgeted.”
While the editorial attacked the CFPB, and Cordray, for problems that the agency took steps to fix years ago, it completely ignored the agency’s successes. According to a December 2, 2015, article in The New York Times, the CFPB has “seized upon its mission” to rein in abuses in financial services under Cordray, including cracking down on predatory for-profit colleges, arranging forgiveness of $480 million of student loans, and ordering the reimbursement of nearly $700 million to Citigroup customers swindled by illegal credit charges. Since its inception, the agency had “provided for $11 billion in relief for over 25 million customers,” according to the Times.
The demands for Cordray’s termination mark the culmination of a years-long conservative campaign to undermine the agency. As New York magazine pointed out in a December 29 article, Cordray will be “one of the few adversaries of Wall Street” left after Republicans assume control of the federal government, and for conservatives, “Cordray’s success at enacting new regulations is a bug, not a feature.”