Days before the Supreme Court will hear arguments about how easily the director of the Consumer Financial Protection Bureau can be fired, the former head of the agency is claiming that he in fact came quite close to getting axed.
Former CFPB Director Richard Cordray — an Obama appointee — writes in a forthcoming book that he believes President Trump was on the verge of forcing him out at the beginning of November 2017.
“I received an unscheduled call from the White House, and a secretary asked me to hold to speak with the president, but then the call was abruptly terminated,” Cordray writes in “Watchdog: How Protecting Consumers Can Save Our Families, Our Economy, and Our Democracy," which is due out Monday.
Cordray, the first Senate-confirmed director of the agency, also writes how in its early days the CFPB was often at odds with GOP lawmakers and other regulators, and discusses Well Fargo's fake-accounts scandal.
But in light of the looming court battle, Cordray's assertion that he believed he would be fired stands out among the book's revelations.
Trump administration lawyers and others will argue in front of the court Tuesday that a Dodd-Frank Act provision requiring a president to find sufficient cause before firing a sitting CFPB director is unconstitutional, affording the agency too much power.
After the 2016 election and the arrival of an administration hostile to the new agency, Trump's legal authority to remove Cordray seemed more just than an academic question.
"The threat that I would be fired as soon as President Trump took office loomed over everything," Cordray writes.
Cordray took steps in the final days of the Obama administration to prepare a legal case to try to keep his job, even asking President Obama to write a letter attesting to his fitness to lead the CFPB to bolster the argument that President Trump lacked the legal cause to fire him.
"It made sense to prepare a lawsuit to contest a firing," Cordray writes. "We didn't know on what grounds a firing would occur, so we had to plan for all contingencies."
Cordray stayed in office for the first 11 months of Trump's term. But when he received the Nov. 1, 2017, call, he thought he knew what was coming.
On that day, Corday writes, Trump had held a private bill-signing in the Oval Office for a congressional resolution invalidating the CFPB’s arbitration rule.
The former CFPB director says he believes then-Chief of Staff John Kelly stepped in to end the call.
"Kelly apparently intervened at that point, and I never heard anything further,” Cordray writes, adding that he was told the White House would call him back but never did. “I knew why the White House had called, but once again I had dodged the bullet.”
The White House did not respond to a request for comment.
However, had Cordray been fired at that time, it is unclear if he would have tried to challenge his removal. Just weeks later, Cordray left the agency of his own accord, returning to Ohio to run for governor.
Cordray's book, which includes a foreword by presidential candidate Elizabeth Warren, the Massachusetts senator and the CFPB's original architect, reveals how he proactively tried to build an argument that President Trump would lack the authority to fire him.
Many had expected Trump would fire Cordray on Inauguration Day or soon thereafter. But the Dodd-Frank provision at the heart of the looming Supreme Court case specifies that the head of the CFPB can be removed only for “inefficiency, neglect of duty, or malfeasance.”
As Trump was set to take office, Cordray describes hiring an attorney and preparing a lawsuit to defend himself on the basis of that provision.
"Recognizing that a court might defer to President Trump's judgment of my fitness for office, we also requested and secured a letter from President Obama, while he was still in office, attesting to my fitness and praising our good work for consumers," Cordray writes. "If the sitting president's viewpoint were deemed to be authoritative, then at least there would be dueling perspectives to present to the court."
Some experts say President Trump
The planned release of Cordray's book one day before the Supreme Court arguments is another chapter in the longstanding partisan fight over the CFPB. Critics of the agency have argued the bureau's single-leader structure gives the director too much power and undermines the president's authority.
The book covers a lot of ground, beginning with the CFPB’s creation by fewer than a dozen people housed at the Treasury Department, an effort led at the time by Warren. Republican opposition to Warren, who ended up running for the Senate, led Obama to choose Cordray to lead the agency. But congressional resistance to the bureau resulted in Obama first installing Cordray through a recess appointment.
Cordray's book says that industry backers consistently looked for ways to remove him.
”Financial interests saw that if they could get me fired — or use the threat of firing me to cow us into inaction — then they might finally succeed in defanging the CFPB,” he writes.
The book also describes how members of the CFPB’s legal staff were threatened with criminal prosecution by House Republican staffers for not turning over documents to the Financial Services Committee.
"The House Republicans continued to make incessant demands to produce reams of documents, backed first by subpoenas and then by threats to hold me in contempt of Congress," Cordray writes. "They even threatened CFPB employees with criminal prosecution if we did not comply to their satisfaction — which, from their adamant posture, we could see that we never would."
Cordray's book says in the CFPB's early days, the agency was also challenged by other regulatory agencies.
The Office of the Comptroller of the Currency, at the start, “sought to crimp our powers by telling their banks that they should not share information with us before discussing it with the OCC first,” Cordray writes. “Their attitude was increasingly intolerable until Tom Curry became the new OCC leader … bringing a welcome pro-consumer outlook.”
The OCC declined to comment. Before Curry was confirmed to run the agency, the acting comptroller was John Walsh.
Although the CFPB aggressively targeted financial services firms under Cordray, his book contains few references to specific industry players beyond the footnotes. There are more personal stories of ripped-off consumers and how the bureau sought to respond to their complaints.
However, the book notes that the agency's response to Wells Fargo’s bogus-accounts scandal in 2016 was a “seminal moment” for the CFPB.
Cordray says Wells Fargo's effort to downplay the scandal was "spin" that "was crushed by the facts — including that millions of phony accounts were involved and that the bank had let go more than five thousand employees in response to these problems — and by the ensuing public outrage.”
"The Wells Fargo matter is an object lesson in how small risks can balloon into large ones in any profit-making entity if they are not monitored closely," he writes.
