Richard Cordray flees the CFPB castle while Donald Trump rams down the door (illustrated)
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This Thanksgiving, I’m grateful for everything my favorite federal agency has accomplished since it was launched in 2011.

It’s recovered billions of dollars for Americans ripped off by banks, and saved millions more by enforcing regulations when others wouldn’t. It’s fought slimy debt collectors, sued the largest student loan servicer for cheating borrowers, and helped make everything from credit cards to payday loans more consumer-friendly.

In the “drain the swamp” era, the CFPB was pretty much the only corner of the federal government actually trying to do that. But now, sad to say, it’s probably time to say goodbye.

The first and only person to ever lead the agency, Richard Cordray, announced he is resigning before the end of the year. That means Republicans finally get their longstanding wish to weaken — if not utterly destroy — the agency created by Obama to help stave off future financial crises.

Why now?

Cordray is no fool. An agency, no matter how independent, can’t stand forever against a party that repeatedly calls it “rogue” — especially when that party controls the rest of the federal government.

That’s clearer than ever now that Trump and Congress have nixed the CFPB’s regulation that allowed consumers to file class-action lawsuits against big banks. Any defenses the CFPB can throw up for consumers, Republicans can legislatively knock down.

His options are to continue fighting a losing battle, or move somewhere he can make a difference. It’s been rumored for a while he might try to run for governor of his home state, Ohio — and he’s leaving himself enough time to do that. The filing deadline is in February, so he has time to take a nice holiday break and decompress from a six-year war on Wall Street before jumping back into campaign mode with both feet.

With his experience as state attorney general and arguing before the Supreme Court, he would be in a stronger place to fight for consumer rights — because even the federal government has limited power to fight individual states.

The future of the CFPB

If I had to guess, the most likely person to take over the CFPB is Republican House Rep. Jeb Hensarling. As the chair of the House Financial Services committee, he’s been the most vocal critic of the agency, and he conveniently announced a couple weeks ago that he would not be running for reelection. After House Speaker Paul Ryan, he’s pulled in the largest sum in political donations from big banks and has pushed legislation to weaken the agency.

He wants the president to be able to directly pick the top leadership and be able to remove it at will, to turn the supervisory agency into merely an enforcer, and to abolish the CFPB’s database of consumer complaints. And his biggest qualification? He hasn’t criticized or disagreed with Trump.

That’s exactly the kind of person Trump has picked for most leadership roles so far, and there’s no reason to think he would do anything different now.

The difference is that much of the federal government is quietly run by career public servants with decades of experience. No matter who a president puts on top, most people already know what to do without being told. But the CFPB is a mere infant in government years, and whoever Trump picks to parent it will be able to thoroughly mold its outlook.

At this point, the best-case scenario is a completely reversal of the current situation — Trump appoints a weak Republican regulator, Democrats sweep Congress in the midterms, and then they’re the ones muttering about its leadership. In the meantime, though, we’re likely to see an unwinding of regulations on payday loans, personal banking, mortgage servicing, debt collection, and a lot more.

This could end up being the biggest financial impact of electing Trump — especially if there’s no watchdog left to prevent another financial crisis.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.

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Article last modified on August 23, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The CFPB: Nice While It Lasted - AMP.

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Article last modified on August 23, 2018. Published by Debt.com, LLC .