While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau has taken the opposite course.
WASHINGTON — With the election of President Donald Trump, the nation’s consumer watchdog agency faced a quandary: how to shield the Obama-era institution from a Republican administration determined to loosen the federal government’s grip on business.
After the election, Richard Cordray, the Democrat who leads the agency, the Consumer Financial Protection Bureau, directed his staff to compile stories from ordinary Americans thanking it for resolving complaints.
The anecdotes, which he solicited in an email to share with the Trump transition team, could provide a counterpoint to critics who had cast the agency as a regulatory scourge on the economy. Implicit in his request to employees was the belief that some accolades would come from parts of the country that helped elect Trump.
“There must be hundreds of such stories,” Cordray wrote in the email in November, which was obtained in a public-records request. He added, “I can think of no better vindication” of the agency’s consumer relief efforts.
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While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau, born out of the Dodd-Frank financial law in 2010, has taken the opposite course. Congress granted it unusually broad authority — and autonomy from the White House and Congress — to enforce existing federal rules and write new ones, including issuing fines against financial companies.
Under Trump it has openly embraced its mission, cracking down on debt collectors, pushing out a major new financial rule on arbitration and pursuing a flurry of enforcement actions against payday lenders and others.
The approach, outlined in emails and other documents obtained through the public-records request, comes as the Trump administration has taken an uncharacteristically low-key public stance toward the agency.
The Trump administration’s restraint was based in part on a pragmatic assessment, according to people familiar with the strategy. At one point, contemplating a high-profile run on the agency, the administration officials examined polling data from political bellwether states, two people briefed on the matter said. The agency, they concluded, was too popular to pick a public fight with.
Republicans in Congress, who have vehemently opposed the agency since its creation, have also been unable to muster enough support to derail its work. Efforts to strike down a rule ordering new consumer protections on prepaid debit cards never made it to a vote in either the House or the Senate.
The stories of gratitude rounded up by the agency’s staff for Cordray illustrated its appeal. Among them was a homeowner in Tennessee who got a disputed lien removed from a property, someone in Kentucky who got assistance warding off a debt collector pursuing a medical bill that had been paid, and a person in Pennsylvania who said the agency helped resolve a contested credit-card debt.
That doesn’t mean the Trump administration and other opponents have given up on neutralizing the bureau’s work.
Administration officials have isolated the bureau from parts of the government that, under President Barack Obama, helped fulfill its mission. In public statements and documents, officials at the Justice Department, Treasury Department and Office of the Comptroller of the Currency have all turned a cold shoulder toward Cordray and his staff.
Cordray’s term as director expires in July, when he could be replaced with a sympathetic Trump appointee. That moment could come earlier as there is speculation that Cordray might resign — perhaps soon — to enter the Democratic primary for governor in Ohio.
“The industry will be very happy to see him out of there,” said Alan S. Kaplinsky, a lawyer with Ballard Spahr in Philadelphia, who represents financial institutions in matters before the bureau. “The people running that agency are definitely Obama people.”
Since Trump’s election, Cordray, 58, has counseled his roughly 1,600 employees to tune out the political noise. “I encourage you to remain focused on doing your good work on behalf of consumers,” he said, according to a script for a call with employees in late November. “Keep calm and carry on.”
The agency was proposed by Sen. Elizabeth Warren, D-Mass., when she was a Harvard professor, to serve as an advocate for consumers in their dealings with financial institutions. Cordray, who was working at the bureau as its enforcement chief, was made its first director in 2012 in a recess appointment by Obama, which heightened the partisan rancor over the regulatory crackdown on Wall Street.
Financial executives and lobbyists describe Cordray as intelligent, pleasant and accessible, willing to meet with industry constituents and hear out their lobbyists. But they also consider him “doggedly ideological” — in the words of Richard Hunt, chief executive of the Consumer Bankers Association, a banking trade group — leader of an agency that is structured like “a dictatorship.”
“Richard Cordray has gone above and beyond to take CEOs to task on things that he had no jurisdiction over,” Hunt said.
The bureau has curtailed abusive debt-collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts.
This week, it began mailing refund checks totaling $115 million to 60,000 people who had paid illegal fees to Morgan Drexen, a debt-settlement company that collapsed two years ago.
The agency has also rolled out the arbitration rule, and it has been putting the finishing touches on a rule that could reshape the multibillion-dollar payday lending industry.
Lobbyists are feeling empowered by the change in administrations. Working on behalf of payday lenders, they have flooded the consumer agency with comments, more than 1 million in all, urging it to halt a proposed crackdown on the industry.
The new rules would mark the first time that the lucrative market — the payday industry collects $7 billion annually in fees — was directly regulated by the federal government.