WASHINGTON — Speculation about the possible political future of Consumer Financial Protection Bureau Director Richard Cordray may be complicating efforts to pass a Senate regulatory relief bill for financial institutions.
Though there has been widespread speculation that Cordray will leave shortly to run for governor of Ohio, the CFPB chief has declined to discuss his future plans. But lawmakers may feel differently about some elements in the regulatory relief bill depending on whether Cordray is remaining in office until his term expires in July.
“A world without Cordray is a very different world in terms of just regulatory certainty and rightsizing regs,” said Sen. Thom Tillis, R-N.C., who serves on the Senate Banking Committee. As long as Cordray is in office, “you are limited in an area where we are just asking for people to be reasonable about the application.”
If Cordray decides to run for governor of Ohio, President Trump would likely be able to quickly install a new director, who could then start easing up on previous actions by the consumer agency. But if Cordray stays, Republicans may be hamstrung in trying to rein in the CFPB.
“The sooner [Cordray] is gone, the better it is for the American consumer,” said Sen. Tim Scott, R-S.C. But Cordray's remaining at the bureau “has an impact because obviously our ability to make rule changes at the CFPB as a body just [isn't] there.”
Cordray doesn’t have to officially declare a gubernatorial run in Ohio until February, but many observers believe if he does run, he will announce earlier so he can begin fundraising and campaigning.
But Senate Banking Chairman Mike Crapo, R-Idaho, insists that uncertainty about the bureau’s leadership is not slowing reg relief talks. Crapo still hopes to craft a deal with Sen. Sherrod Brown, the panel’s top Democrat and a staunch defender of the CFPB, on a package of reforms.
“I can’t give you an exact time on when we will be able to move a product, but I am very hopeful” that a regulatory relief bill will get introduced soon, said Crapo. “Until a deal is made, there is no deal, but I feel very confident we are going to make some good progress.”
That Crapo said he is still committed to working with Brown is significant because the Ohio Democrat is one of the more progressive members in the Senate. Brown is unlikely to significantly break with Sen. Elizabeth Warren, D-Mass., the founder of the CFPB and an outspoken advocate for the bureau.
But it may also indicate that whatever package is released, CFPB reform is not part of it. Republicans have been pressing to restructure the bureau to a bipartisan commission, a desire that has waned somewhat after Trump won the November election. Still, the industry is hopeful a commission structure can prevail despite opposition from Warren and other Democrats.
Some House lawmakers acknowledged they’ve temporarily dropped calls for a commission while they see what Cordray will do.
“We have held back on” calling for a bipartisan commission “to see what Director Cordray does and then that may bring about the opportunity for a reform package to make its way back through the Senate,” House Chief Deputy Whip Patrick McHenry, R-N.C., said at the National Association of Federally-Insured Credit Unions' caucus meeting.
It’s unclear if Republicans will return to that idea. For their part, Democrats said earlier this year that they want to keep the agency with a single director despite Trump’s ability to pick Cordray’s successor.
“There is a debate within the Republican conference and probably the Democratic conference as well on do we really just want to wait for a new director who will have more alike beliefs as us?” Sen. Shelley Moore Capito R-W.Va., said at the credit union conference.
Members on both sides of the aisle remain optimistic about passing regulatory relief prior to the 2018 midterms.
“There is a hunger for moving things forward,” Sen. Heidi Heitkamp, D-N.D., told the credit union conference last week.
The package that eventually comes forward will likely be more tempered and focused on small banks and credit unions, as Democrats are unwilling to support any large Dodd-Frank Act rollback.
“One of the problems we have consistently, is while we are moving a package that works for small lenders,” Republicans say, “ ‘Let’s hook our little Volcker Rule change or our little amendment’ ” to the legislation “and it drags it down and we fail,” Heitkamp said.
“We have the obligation to keep those amendments off,” she said.
The Senate has another obstacle as it is also pressed for floor time and is facing a number of more pressing items than regulatory relief.
“We really do want to get something rolling,” said Sen. Mike Rounds, R-S.D. “The challenge you have in the Senate is … once again you are talking about time on the Senate floor, which is so valuable.”