Director Richard Cordray revealed on November 15 that he will step down as head of the Consumer Financial Protection Bureau. The news was met with cheers or tears, depending upon one’s vantage point. For the legislators and industry leaders who sought his departure along with reforms at the agency, smiles were bright. But for those who appreciated his strident and vigorous consumer advocacy, the announcement drew worry about what (or who) might come next.
This doesn’t come as a surprise: Cordray has been at the center of opposing politics since his appointment. President Trump even claimed he didn’t want to fire the chief for fear that he would become a “martyr” for consumer advocates. This announcement does, however, introduce more uncertainty into an already volatile environment. As financial services providers - and the vendors who support them - how “should” we react to this changing of the guard?
The short answer is to do nothing. A posture of temporary inertia is supported by the assumptions below.
- It will be a while before Congress works through the Bureau’s leadership conundrum. President Trump defended his non-firing of Cordray with saying he didn’t want Cordray to be a “martyr” for the consumer movement. But there’s still shifting ground among legislators as to whether to require the Bureau to be led by a panel versus single Director, or to defund or decommission the Bureau altogether. Cordray’s departure could result in any of a broad range of scenarios, and it’s just too early to predict which scenario will be the one to actually unfold.
- Regulatory reforms and relief are not yet finalized. Therefore, any action would be premature. At any organization, the top-tier official sets an important tone and helps guide organizational strategy - but that individual is never on the front lines of execution. The departure of a figurehead does not dramatically nor immediately change the day-to-day operations. To the contrary, it cements the existing protocols until a new leader takes the helm. Particularly when a government bureaucracy is involved, the rank-and-file will continue to execute their responsibilities as they were most recently communicated and understood. Examinations and rulemaking will continue as before the Director’s resignation.
- Regulatory reforms are in a state of flux. Trying to anticipate or predict what “might” happen is best left to the pundits and prognosticators. Outguessing Washington can be messy business for those of us who have to deliver compliant outcomes. Compliance does, and must, follow an established path until that path is officially altered by a new regulation. In the moment, compliance happens at the point a transaction takes place, and it’s not influenced in the moment by which individual or group sits atop the governing body. The rules will remain the rules until those rules actually change...and even then, we will have months or years to prepare for the changes and reconfigure our operations. Immediate reaction is always ill-advised.
Whether Director Cordray continues in public life (as in his rumored run for the Ohio governorship), or moves in a different direction, his tenure as the CFPB’s first leader adds to his legacy as a “man of the people.” Cordray took the agency's mission to heart and executed upon it with all his might. Regardless of politics and despite any disagreement one may have with his methods, he saw to it that his agency took a vigorous stance in protecting and defending the rights of consumers. He made sure those who broke the law felt the sting of enforcement, and made sure the public knew how their Bureau dollars were being spent. Whether you approved of or disagreed with how he did the job, it can’t be denied that he left his mark on the Bureau.
Any manager who’s been in the job more than a few years has written an email announcement that ends with the words I’ll use to end this entry:
We would like to thank Director Cordray for his contributions, and wish him all the best in his future endeavors.