I first met Rich Cordray the night before the first-ever Ohio state Consumer Protection Summit in Columbus back in 2010. It was long before the CFPB existed, and even longer before he would be considered for the job as America’s top consumer advocate. My book Stop Getting Ripped Off had just come out, and I was asked to give the keynote address at the summit. On the eve of the event, a few speakers were invited to a private home for dinner with the attorney general, who was hosting it.
I didn’t know who Cordray was at the time; I’d been on a whirlwind book tour and did a terrible job of preparing for this dinner. It was an impressive group. David Vladeck, director of the FTC Bureau of Consumer Protection, was also there. He’s a tall, broad-shouldered man with a huge handshake. As I entered the dining room, and sat down, I tried to keep up with the usual hurumph-huruphy banter you get at this kind of thing. I barely noticed a quiet, slight fellow with sandy hair was sitting to my right. I don’t think he said a word for 10 minutes or so.
It was an embarrassingly long time before I realize this quiet man was the attorney general. Wherever the head of the table was, he wasn’t at it. When Cordray finally did speak, it was in measured, even, but determined tones. We talked about the culture of gotchas, about the death of the price tag, about confusion marketing and how these things contributed to the housing bubble and subsequent collapse. We all agreed something should be done, but Cordray was far more deliberative than me. He was well aware that marketplace changes would face stiff headwinds from industry groups, and he wanted to hear them out.
The next day, as Cordray introduced me, he lamented “shams, stings and hustles” that marked so much of the financial industry, and he called for a new federal agency to help protect consumers.
It was an interesting time for the history of consumer protection in America. At the time, Congress was debating the financial reform bill, and Elizabeth Warren was championing creation of a new agency devoted exclusively to personal finance protections. Existing regulators had failed so spectacularly that it was necessary to start from scratch, supporters like Cordray argued.
“(It) needs to be a separate free-standing agency, which the House passed and what we would like to see the Senate pass. It might not be in the cards, and I wouldn’t yield so easily that it isn’t in the cards, so we’ll have to see the proposals,” he said at the time. “At a minimum, the head of the consumer finance protection agency should be separately appointed by the President and answerable only to the President, and not to a sub-cabinet office. We’ve seen the problem of federal regulators who don’t regulate, and that makes our job that much harder at the state level and gets in the way of individuals being protected in the market place. This legislation should move.”
Eventually, it did, and the Consumer Financial Protection Bureau was born. Everyone expected Elizabeth Warren to be its first leader. Republicans said they would block that, so after a lot of maneuvering, Cordray became a bit of a compromise candidate.
He’s been a good choice, perhaps even better than Warren, for a very challenging job. When Cordray arrived, there was no place in Washington D.C. for wronged consumers to turn and quickly get results. Immediately, the bureau set up a hotline and dispute resolution procedure, and consumers flocked to it.
From 2011 to January 2017, the bureau fielded 1,080,700 complaints and returned $11.7 billion to consumers who were determined to be victims of deceptive and unfair financial business practices. Anyone who’s ever filed a complaint with another regulator, like the Office of the Comptroller of the Currency, knows that’s a remarkable feat. Along the way, many firms were scared straight. The bureau also tackled confusing mortgage closing documents, class action waiver fine print, payday lenders, student loan servicers — all the issues that crammed the comments of my Red Tape Chronicles blog. Bicker with individual decisions all you want, but millions of voiceless consumers had a voice now. Cordray’s CFPB is a success. Just ask almost any consumer who has interacted with it.
I’ve heard from small bankers who complain the CFPB seems overly aggressive, and that this favors larger banks with larger legal departments. That seems a fair criticism. The other day, I heard from someone at a financial institution who offered a really level-headed assessment of that issue — frequent audits really were a drag, but then, they also helped chase off a few bad actors in his industry. A true mixed bag.
When Cordray got the job and moved from Columbus to Washington (at least for weekdays), I wrote a feature story on him for MSNBC.com. As I called old friends from the summit looking for “personality” sketch elements, everyone said the same thing. The mild-mannered, deliberative man I met at dinner was the real Rich Cordray. As for quirks, he was kind of boring. All I could come up with was he often took his shoes off during the day and walked around the office in his socks.
It’s laughable that critics started calling him King Richard, and tried to cast him as a dictator taking away Americans’ liberty and freedom. Perhaps we could have an intelligent discussion about the maximum interest rate that’s fair to charge down-on-their-luck payday loan borrowers. Making rules to protect such vulnerable people in the face of obvious exploitation is hardly an attack on freedom. Those who trivialize important discussions with such cartoonish rhetoric are just as bad as every Russian troll hired to divide Americans.
Cordray and his socks are headed back to Columbus now, and I suspect he’s pretty happy about that. He’s not really at home in the political bickering. He’s likely to run for governor, a race that will attract national attention, in part because the winner will succeed John Kasich, another reasonable Ohioan. You will certainly hear from reporters that Cordray’s speeches lack the fire and brimstone of his competitors, and pundits will wonder if he can really stir the emotions of voters. He’ll be described as too studious, maybe even too boring.
We should be so lucky.
Cordray’s term was set to expire in July, and the administration has long signaled its intention to gut the CFPB. His departure is potential disaster for consumers. I suspect Trump might not even bother to name a successor. Leaving positions unfilled is a Trump tactic now. It won’t take long before CFPB enforcement drops off the map, and companies get the message that its open season on consumers again. Perhaps the hotline will dark. Even worse, perhaps the CFPB will be reorganized to work like every other federal regulator. They all fail because they are full of industry insiders who go through a revolving door designed to make sure that corporate interests are heard first. Instead of having a strong leader and true independence to act, they are commissions which are politically appointed and designed for deadlocks and inactivity. That, ladies and gentleman, is Washington’s real swamp.
Good luck, Rich, and thank you. I’m not worried about you, I’m worried about the rest of us.
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