WASHINGTON _ Richard Cordray announced Wednesday that he expects to step down before the end of the month as director of the Consumer Financial Protection Bureau.
Cordray was appointed by President Barack Obama as the first director of the bureau, which was created by the 2010 Dodd-Frank financial overhaul law. Cordray's term was not set to expire until July.
President Donald Trump will get to nominate a replacement to head the bureau _ an agency that many Republicans have strongly opposed. The nomination requires Senate confirmation.
"The administration will announce an acting director and the president's choice to replace Mr. Cordray at the appropriate time," Raj Shah, deputy White House press secretary, said Wednesday.
Consumer advocacy groups and proponents of tighter financial regulation praised Cordray as a fierce defender of ordinary Americans and said they fear a Trump-appointed successor will likely seek to undo some of the bureau's accomplishments _ or at least slow the bureau's pace of making and enforcing rules.
"You can expect a lot less enforcement," said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "We are concerned that a new director appointed by this president will not be Rich Cordray."
And that's what many in the finance industry are counting on. To them, Cordray was less a friend of the working class than a powerful and unaccountable bureaucrat who stretched the rules governing his new agency and was overly zealous in enforcing some rules.
Scott Pearson, a partner at law firm Ballard Spahr who has represented companies facing off with the bureau, said financial services firms hope a new director will rein in the agency and scale back enforcement actions.
"I would anticipate the new director nominee will be someone who is pro-industry and in favor of deregulation," Pearson said. "Under a new director, I think it's fair to assume you will no longer see the CFPB pushing the envelope. I don't see a Trump-appointed director bringing the kind of cases Richard Cordray allowed to be brought."
There has been widespread speculation that Cordray, a Democrat, will run for governor of his home state of Ohio. Cordray made no comment on his future in the email he sent to the bureau's staff announcing his plan to step down.
In his message, Corday touted new rules created by the bureau, including toughening mortgage safeguards to try to prevent a repeat of the subprime housing market crash. And he noted that the bureau has provided about $12 billion in refunds, mortgage principal reductions and other relief to nearly 30 million consumers since opening in 2011.
"I am confident that you will continue to move forward, nurture this institution we have built together, and maintain its essential value to the American public," Cordray told his colleagues.
"And I trust that new leadership will see that value also and work to preserve it _ perhaps in different ways than before, but desiring, as I have done, to serve in ways that benefit and strengthen our economy and our country," he said.
One of the bureau's fiercest critics, Rep. Jeb Hensarling, R-Texas, cheered the news of Cordray's imminent departure. Hensarling has urged Trump to fire Cordray and pushed legislation through the House that would sharply reduce the bureau's authority.
That legislation, the Financial Choice Act, is not expected to be approved by the Senate, meaning any change in direction for the bureau is more likely to come from a new leader than through a Capitol Hill mandate.
"We are long overdue for new leadership at the CFPB, a rogue agency that has done more to hurt consumers than help them," said Hensarling, chairman of the House Financial Services Committee. "The resignation of the bureau's director is an excellent opportunity to enact desperately needed reforms."
The bureau's supporters, though, applauded Cordray on his way out the door, calling him a tough and effective regulator who led the young bureau _ the first federal financial regulatory body dedicated exclusively to protecting consumers _ through six tough years.
Anna Laitin, director of financial policy for advocacy group Consumers Union, said in a statement Wednesday that Cordray "leaves behind a legacy of accomplishment that has benefited millions of Americans and helped ensure consumers get a fair deal when they shop around for a loan, open a bank account, or make a purchase with their credit card."
Dennis Kelleher, chief executive of financial regulation advocacy group Better Markets, called Cordray a "financial consumer protection superhero" who "set the gold standard for stopping and punishing financial predators, scammers and rip-off artists."
Cordray's departure could trigger a messy succession fight at the bureau.
The Obama-era creation has been praised by consumer advocates for high-profile enforcement actions that have led to billions of dollars in refunds and penalties.
But Republicans argue that it is too powerful and limits Americans' access to credit.
It's unclear who would take over as acting director. And Democrats _ led by Sen. Elizabeth Warren, the Massachusetts Democrat who conceived of the idea for such an agency _ are expected to mount a fierce campaign against whomever Trump nominates as a replacement.
The Dodd-Frank law, which created the bureau, says the deputy director becomes the acting head "in the absence or unavailability of the director."
David Silberman, associate director of the bureau's Research, Markets and Regulations Division, has been serving as acting deputy director since January 2016.
But the law is unclear about whether the deputy director would take over in the case of a director's resignation.
That could open the door for Trump to pick an outsider as acting director in accordance with the Federal Vacancies Reform Act. That person would run the agency while a nominee moved through what could be a lengthy Senate confirmation process.
The vacancy law allows the president to designate someone who already has been confirmed by the Senate to perform acting duties. That could be Treasury Secretary Steven T. Mnuchin, who would take on the CFPB duties in addition to his Treasury role.
There is precedent for such an arrangement. Treasury Secretary Timothy F. Geithner oversaw the bureau until Cordray became director in early 2012.
In the long term, Trump is expected to pick a markedly more conservative director to lead the bureau. His pick could come from within the financial services industry, but could also be a conservative academic or even a current or former lawmaker.
Some consumer advocates said they feared Hensarling may be considered for the post. The conservative Republican, who would have had to step down from his finance committee chairmanship in 2019 under GOP rules, recently announced he won't be running for reelection next year.
Others suggested industry attorneys or bank regulators who served in Republican administrations may be considered.
