Richard Cordray may be campaigning for the governor of Ohio, but he still has strong feelings about his former role as the nation’s top consumer watchdog.
In a series of tweets, Cordray lambasted his replacement at the Consumer Financial Protection Bureau for deciding to reconsider a rule aimed at protecting consumers from abusive payday lending practices.
Cordray had helped craft the rules when he headed the agency and it was one of his last measures before stepping down in November. The bureau confirmed it would reconsider the rules in a statement Tuesday.
“Truly shameful action by the interim pseudo-leaders of the CFPB, announcing their plans to reconsider the payday lending rule just adopted in November,” Cordray tweeted. “Never mind many thousands of people stuck in debt traps all over the country. Consumers be damned!”
The rules would require lenders to determine whether a borrower could afford to repay a loan with full interest within 30 days. The rules would also limit the number of loans lenders could make to a borrower. That and other provisions outraged the payday lending industry, which argued such regulations could drive them out of business. The rules were scheduled to go into effect in August 2019, though Tuesday marked a compliance deadline.
Cordray, who was appointed by President Barack Obama, was replaced by White House Budget Director Mick Mulvaney, who is serving as acting director of the consumer watchdog agency. Mulvaney has been a critic of the rules.
Critics argue that the loans help those who do not have access to other credit and banking products, such as some low income Americans.
But Cordray and other proponents say the rules are needed to protect consumers against predatory loans, some carrying interest of up to 391 percent. Payday loans, they argue, trap people in an unpayable cycle of debt.
The White House referred questions about the rule to the Consumer Financial Protection Bureau. The CFPB did not immediately respond to questions.
Dennis Shaul, CEO of the Community Financial Services Association of America, a trade association that represents payday lenders, said the organization was “pleased” that the agency will take a new look at the payday lending rule.
“The bureau’s rule was crafted on a pre-determined, partisan agenda that failed to demonstrate consumer harm from small-dollar loans, ignored unbiased research and data, and relied on flawed information to support its rulemaking,” he said.
Cordray acknowledged that the announcement appears to be limited to pushing back the compliance deadline under the new rule, which was to have become effective on Tuesday. But he also argued that the administration had a more sweeping goal in mind.
In a series of tweets, Cordray called for the religious community to oppose the Trump administration’s decision, quoting the Bible to argue that repealing the rule would hurt the poor. And he referred to those who would repeal the rules as “zealots and toadies.”
“Congress could pursue a… vote to overturn” the rule, he tweeted, “but it seems they don’t have the guts. Instead, hire new bureaucrats to shred years of analysis and kill it off stealthily.”
Sen. Sherrod Brown, a backer of the new rule and the ranking Democrat on the Senate Banking Committee, also lined up in opposition to any repeal.
“Rather than focus on keeping the government open, the Trump administration’s top budget expert is busy unraveling important consumer protections for payday borrowers,” the Ohio Democrat said.
Sen. Rob Portman, R-Ohio, “is reviewing this issue and awaiting CFPB’s final decision,” his spokeswoman, Emily Benavides, said.