NEW YORK ― Big business and congressional Republicans salivate at the idea of gutting the Consumer Financial Protection Bureau, the brainchild of Sen. Elizabeth Warren (D-Mass.). Now, President-elect Donald Trump is moving toward what they’ve long wanted: a weak agency that sides with financial predators over consumers.
Trump met with former Rep. Randy Neugebauer (R-Texas) on Wednesday and is considering Neugebauer to run the CFPB, Trump spokesman Sean Spicer confirmed on a Thursday call with reporters.
A source close to the transition team told HuffPost that Neugebauer has yet to be offered the job, but that no other candidates are being looked at yet. HuffPost previously reported that Neugebauer’s name was being floated as agency chief if Trump decides to fire the current director, Richard Cordray.
When he was in Congress, Neugebauer opposed CFPB actions like the first-ever federal rule cracking down on payday loans. He labeled the agency’s effort to require payday lenders to take basic steps to ensure consumers can pay back their loans and not get trapped in a cycle of debt as a “paternalistic erosion of consumer product choices.” He introduced a bill to overhaul and weaken the agency.
As the CFPB was originally designed, the president could not fire its director at will before his five-year term expired. But a federal appeals court ruled last year that the agency structure is unconstitutional. Unless that ruling is overturned by the Supreme Court or reconsidered by the lower court that decided it — the CFPB petitioned that court to vacate the earlier ruling — Trump will be able to remove the Obama-appointed Cordray at any time for any reason.
Warren pushed for the CFPB to be created in the wake of the financial crisis as part of the 2010 Wall Street regulatory reform law. It is funded as part of the Federal Reserve system, which means its budget cannot be cut through the congressional appropriations process, and it has a single powerful director, rather than the bipartisan boards found at other agencies like the Securities and Exchange Commission.
Under Cordray’s leadership, the CFPB has returned $12 billion to 27 million people caught up in various scams, passed pro-consumer rules on issues like mortgage disclosure, proposed a mandatory arbitration rule that is being finalized, and hit banks for conning customers into paying for expensive add-on products that don’t do much. The agency was central in exposing the large-scale checking and credit card fraud at Wells Fargo.
CORRECTION: The CFPB has proposed but not finalized a rule on mandatory arbitration.