U.S District Judge William Pauley criticized the Consumer Financial Protection Bureau (CFPB) on Tuesday for its “indifference” on “how to distribute money left over from its 2015 settlement with Sprint Corp over unauthorized customer charges,” Reuters reported.
The judicial criticism is yet another blow to the reputation of the controversial Richard Cordray, who has been the director of the CFPB since July 2013, when the Senate confirmed his appointment. He had served as director under a recess appointment by President Obama since 2012.
Cordray has been under attack for what conservatives call his complete lack of accountability to Congress, a flaw they say was built into the enabling the Dodd-Frank Act.
The politically ambitious Cordray is aligned with the far left politics of Sen. Elizabeth Warren (D-MA), who provided the academic justification for the establishment of the new agency.
In February, Breitbart News reported that President Trump was considering firing Cordray, whose term is set to expire in 2018, but noted that “Trump can only dismiss Cordray for inefficiency, neglect of duty, or malfeasance.”
Cordray is said to be considering a run for the Democratic Party’s nomination for governor of Ohio in 2018 but has yet to pull the trigger on that decision, though his window of opportunity is rapidly closing, as Breitbart News reported in May:
Consumer Finance Protection Bureau Director Richard Cordray spent time with House Democratic lawmakers Wednesday, having met in recent months with a menagerie of far-left interest groups — meetings likely to fuel rumors the controversial Democrat is planning to run for governor of Ohio.
Cordray has been the target of Republican lawmakers in particular, who have accused Cordray of acting unlawfully and running a “rogue federal agency.” Republicans have opposed the CFPB, created out of the 2010 Dodd-Frank financial reform bill, from its inception and have called for the White House to fire Cordray.
“For conducting unlawful activities, abusing his authority and denying market participants due process, Richard Cordray should be dismissed by our President,” said Rep. Jeb Hensarling (R-TX) in April. “Today, Mr. Cordray and his CFPB don’t just act as a cop on the beat, they act as legislator, prosecutor, judge and jury all rolled into one.”
Tuesday’s critical court decision could further complicate Cordray’s future political plans, even though Judge Pauley ruled in the CFPB’s favor.
Pauley “nonetheless rejected a request by the attorneys general of Connecticut, Indiana, Kansas and Vermont to send $15.1 million remaining from the $50 million accord to two state-based projects, saying the money should go to the U.S. Treasury,” Reuters reported:
“The decision raised the question of whether the CFPB, whose September accord with Wells Fargo & Co over unauthorized customer accounts sparked a national scandal, was inattentive toward enforcing one of its own settlements, at a time that some Republican lawmakers hope to strip some of the agency’s power.
Sprint had agreed in May 2015 to refund $50 million to customers subjected to the “cramming” of charges onto their wireless bills, following similar settlements by AT&T Inc, T-Mobile US Inc and Verizon Communications Inc.
But a plan to send the leftover $15.1 million to the Treasury was put on hold when the states proposed their alternative in January.
“Ultimately, Pauley sided with the CFPB, but said its delay kept the money out of Treasury’s hands for six months,” Reuters reported:
The CFPB’s role as a public watchdog “extends to properly disposing of all funds secured through the resolution of an enforcement action even after the underlying fraud has dissipated and the victims have been made whole,” Pauley wrote.
“Until this court issued its April 10 order, the CFPB appeared uninterested in the fate of the unexpended funds,” he added. “It leads this court to ask who will guard the guardians.”
The CFPB declined to comment. A spokeswoman for Connecticut Attorney General George Jepsen said his office, which handled legal filings in the case, was reviewing the decision.
In court papers, Overland Park, Kansas-based Sprint said it would defer to Pauley’s decision.
Judge Pauley’s blistering criticism of the CFPB comes at a bad time for Cordray.
Some in the Trump administration and House Republicans are continuing to build a “for cause” case to remove Cordray as director of the agency and Judge Pauley’s decision provides them with compelling evidence to support their case.
“The House Financial Services Committee is threatening to file contempt charges against Consumer Financial Protection Bureau Director Richard Cordray for allegedly lying about the bureau’s investigation into the Wells Fargo scandal,” American Banker reported earlier this month:
In a 15-page report released Tuesday by Republican staff, the committee claimed that the CFPB has not produced records showing that it conducted a full investigation of Wells’ branch sales practices or that it was aware of problems with phony accounts before the L.A. city attorney took action against the bank.
The report appears aimed at proving that Cordray lied to Congress in April when he testified that the CFPB had conducted an “independent and comprehensive” investigation and that the agency was already tracking Wells’ sales practices.
Cordray has disputed the House committee staff report, saying it “devolves into various misstatements and allegations about the extent of the Consumer Bureau’s cooperation with the committee’s investigation.”
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