‘Cordray Tower’ And Other Reasons For Trump To Fire CFPB Director Cordray
Even before its namesake ran for President, Trump Tower was seen as a symbol of the ultimate in opulence. Since the election, some have quipped that the White House was a step down for Donald Trump from his residence at the Manhattan office and apartment building he developed in the 1980s. But another government building may trump both Trump Tower and the White House in opulent costs.
Consumer Financial Protection Bureau Director Richard Cordray recently ordered a massive renovation of the building the regulatory agency leases in downtown Washington, D.C., to include “a four-story glass staircase, two-story waterfall and a sunken garden,” according to The Hill. This is but the latest reason President Trump should fire Cordray.
The House Financial Services Committee found the cost of renovating “Cordray Tower” has already ballooned to $483 per square foot, more than three times the cost of a typical luxury renovation in D.C., which runs at a rate of $150 per square foot. This figure, according to the committee, also exceeds the comparative costs of building Trump Tower, at $334 per square foot.
Yet when Cordray was questioned by a member of Congress about these dubious expenditures, Cordray once sniped, “Why does that matter to you?” Cordray, you see, does not answer to Congress.
Created by Dodd-Frank in 2010, the CFPB was handed jurisdiction over just about every U.S. business that provides some form of consumer credit, but with little accountability to either Congress or the President. According to its boosters, the CFPB was intended to protect the “little guy” from “Wall Street predators.” However, Cordray’s lavish building renovation is just the latest indicator that unfortunately, the CFPB isn’t exactly championing the underdog.
Regulations put out by the CFPB have imposed crushing costs on community banks, credit unions and consumers, as I have previously written in Forbes.
Then there are also the widespread complaints of discrimination that cast a pall over CFPB operations. According to a recent survey by the Government Accountability Office, 25 percent of the CFPB’s female, African American and Asian American employees say they’ve experienced discrimination at the CFPB.
This is the same agency that has flung around charges of discrimination against private businesses. The CFPB—going beyond its jurisdiction and stretching the bounds of anti-discrimination law—has used statistical patterns to falsely tar thousands of automobile dealers with accusations of discrimination, based on abstract theories about racial bias in interest rate negotiations. Despite Dodd-Frank’s ban on CFPB regulation of auto dealers, under Cordray’s direction, the agency has targeted them en masse. Yet, as with the building’s costs, Cordray has shrugged all these problems off in congressional hearings.
The CFPB came up with a convoluted rationale to claim the process of negotiating car loan interest rates was biased against minorities. It launched what former CFPB enforcement attorney Ronald Rubin has called a “comically aggressive plan” that involved trying to guess a car buyer’s race from his or her name and address. Never mind that this scheme (predictably) failed. Many of those who received refunds from this purported discrimination against black and Latino consumers turned out to be white.
Yet this guessing game is one of several Cordray initiatives that abandoned due process in implementing and enforcing regulations. In 2012, the Department of Housing and Urban Development (HUD) transferred its investigation of PHH Corporation, a financial services company, to the CFPB as required under Dodd-Frank for all enforcement of the Real Estate Settlement Procedures Act (RESPA). In 2015, the CFPB suddenly reversed a longstanding HUD interpretation of permissible activity under RESPA that some referral fees among companies involved in a real estate transaction were permissible, rather than illegal “kickbacks” under the law. Upending that widespread understanding, the CFPB sanctioned PHH for collecting referral fees from mortgage insurers as far back as 2008, levying a fine on the firm of $109 million.
In an October decision on a case brought against the CFPB by the beleaguered PHH, a three-judge panel of the United States Court of Appeals for the District of Columbia ruled that the President has the constitutional power to fire the CFPB director “at will,” in the same way he can remove a Cabinet secretary without cause. That ruling has been vacated because the full appeals court is now considering the case, but the panel’s reasoning is still instructive.
Meanwhile, Dodd-Frank still allows the President to dismiss the CFPB director for “inefficiency, neglect of duty, or malfeasance in office.” Many actions Cordray has taken, as well as apparent neglect of serious issues festering at the CFPB, satisfy all three conditions for removal.
And as the D.C. Circuit panel ruled in the same opinion, the CFPB’s retroactive application of its new interpretation of the law in the PHH Corporation case, coupled with the massive fine, violated the Constitution’s guarantee of due process and flunked “Rule of Law, 101.”
Firing Cordray would put President Trump on the side of consumers instead of Washington elites. And that bold decision would enjoy much support in Congress, including from some of the president’s erstwhile critics of the free-market persuasion. Senators Ben Sasse (R-NE) and Mike Lee (R-UT), who strongly opposed Trump becoming the Republican presidential nominee, recently wrote a letter laying out reasons for Trump to fire Cordray.
Firing Cordray would prove a uniting cause for those looking out for the true interest of consumers.
Originally posted to Forbes.