How a Romney Victory Would Impact the CFPB

in In the News
October 31st, 2012

From American Banker
By Kate Davidson
October 25, 2012

WASHINGTON — 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…

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…

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

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. “You might have a situation where Romney sends a name up and sends a message as well saying, ‘I support these changes and I’m committed to working with Congress to do that…’”

Still, others pointed out that rules, by their nature, take a long time to prepare, propose and finalize, and that it would be a Herculean effort for the CFPB to shift gears or ramp up activity in the face of a new administration.

Even if they could, others said it’s not politically feasible for them to do so…

Cornelius Hurley, the director of the Boston University Center for Finance, Law & Policy, said the overall supervisory climate is likely to change under a Republican president who has campaigned on a platform of less regulation.

“It would be hard to swim against the tide if the zeitgeist in Washington becomes deregulation again, and you have this one agency that’s going in a different direction,” Hurley said.

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