Magazine article American Banker

How a Romney Victory Would Impact the CFPB

Magazine article American Banker

How a Romney Victory Would Impact the CFPB

Article excerpt

Byline: Kate Davidson

WASHINGTON a Although the prospects of eliminating the Consumer Financial Protection Bureau are close to zero, changes to its leadership structure appear increasingly likely if Mitt Romney wins the White House.

What is less clear is what a Republican administration would mean for the agency in the short term.

Republicans have refused to confirm an agency head until reforms are made, a mantra that may make it awkward to send up their own nominee.

But the urgency with which they move ahead depends largely on the agency's director, Richard Cordray, who many expect will ride out the last year of his recess appointment before running for higher office in his home state of Ohio.

"If you're running for office and you want to be a foil against the administration, staying in and being a thorn in their side kind of works to your benefit," said Mark Calabria, the director of financial regulations studies at the Cato Institute, and a former staffer for Republican Sen. Richard Shelby. "There's a lot of reasons to suspect he would not leave."

As a recess appointee, Cordray's term lasts until the end of 2013, rather than the typical five-year term for a Senate-confirmed appointee.

Political appointees often offer to resign when a president of the opposing party is elected so that the new administration has a chance to install their own people.

But with Republicans so openly hostile toward the Dodd-Frank Act, and the CFPB in particular, observers said Cordray is likely to stick around.

"I think he has the wherewithal to stay even if it becomes uncomfortable," said Daniel Meade, a partner with Hogan Lovells and former senior counsel for the House Financial Services Committee. "He might even view it as his duty. I doubt that Director Cordray would resign to let a President Romney appoint a new director. I think he'd stick it out as long as the term allowed."

Isaac Boltansky, an analyst at Compass Point Research & Trading, said he expects Cordray to make a move back to Ohio at some stage, however.

"I think he would make the Romney administration make the next move, but ultimately we all know what his next address is go to be: he'll be going back to Columbus," Boltansky said.

Some observers said they don't expect the Romney administration would rush to fill the slot.

The new president would be faced with a slew of open financial regulatory positions, and is likely to be far more focused on filling slots at the Treasury Department, Federal Deposit Insurance Corp. and Securities and Exchange Commission.

In addition, Calabria said, sending up a nominee for the bureau could be viewed as somehow legitimizing an agency of which Republicans remain skeptical.

"It's kind of hard to say we're against the agency and we think it's going to be reformed and we're not going to nominate anybody until it's done," Calabria said. …

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