WASHINGTON — With the election of President Trump, the nation’s consumer watchdog agency faced a quandary: how to shield the Obama-era institution from a Republican administration determined to loosen the federal government’s grip on business.
In the weeks after the election, Richard Cordray, the Democrat who leads the agency, the Consumer Financial Protection Bureau, directed his staff to compile stories from ordinary Americans thanking it for resolving complaints.
The anecdotes, which he solicited in an email to share with the Trump transition team, could provide a counterpoint to critics who had cast the agency as a regulatory scourge on the economy. And implicit in his request to employees was the belief that some accolades would come from parts of the country that helped elect Mr. Trump — evidence that the popularity of consumer safeguards transcends party divisions.
“There must be hundreds of such stories,” Mr. Cordray wrote in the email in November, which was obtained in a public records request. He added, “I can think of no better vindication” of the agency’s consumer relief efforts.
While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau, born out of the Dodd-Frank financial law in 2010, has taken the opposite course. Congress granted it unusually broad authority — and autonomy from the White House and Congress — to both enforce existing federal rules and write new ones, including issuing fines against financial companies.
CreditKevin J. Miyazaki for The New York Time
The approach, outlined in emails and other documents obtained through the public records request by The New York Times, comes as the Trump administration has taken an uncharacteristically low-key public stance toward the agency, a prominent blue holdout in a federal regulatory regime newly awash in red.
The White House’s restraint was based in part on a pragmatic assessment, according to people familiar with the strategy. At one point, contemplating a high-profile run on the agency, the White House examined polling data from political bellwether states, two people briefed on the matter said. The agency, they concluded, was too popular to pick a public fight with.
Republicans in Congress, who have vehemently opposed the agency since its creation, have also been unable to muster enough support to derail its work. Efforts to strike down a rule ordering new consumer protections on prepaid debit cards never made it to a vote in either the House or the Senate.
“The public does not share the G.O.P.’s ire toward the agency or its mission,” said Dean Clancy, a Tea Party activist who worked in the White House under President George W. Bush and is now a policy analyst who tracks actions of the consumer bureau. “It is an agency about protecting the little guy, and that is tough to oppose.”
The stories of gratitude rounded up by the agency’s staff for Mr. Cordray illustrated its appeal. Among them was a homeowner in Tennessee who got a disputed lien removed from a property, someone in Kentucky who got assistance warding off a debt collector pursuing a medical bill that had been paid, and a person in Pennsylvania who said the agency helped resolve a contested credit card debt.
That doesn’t mean the Trump administration and other opponents have given up on neutralizing the bureau’s work.
Administration officials have isolated the bureau from parts of the government that, under President Barack Obama, helped fulfill its mission. In public statements and documents, officials at the Justice Department, the Treasury Department and the Office of the Comptroller of the Currency have all turned a cold shoulder toward Mr. Cordray and his staff.
Lobbyists for the financial industry are working behind the scenes on efforts to dismantle some of the bureau’s signature initiatives, according to people directly involved in the plans. They include lawsuits to be filed in reliably conservative courts when new regulations are issued.
For now, though, it is mostly a waiting game. Mr. Cordray’s term as director expires next July, when he could be replaced with a sympathetic Trump appointee. That moment could come earlier as there is speculation that Mr. Cordray might resign — perhaps soon — to enter the Democratic primary for governor in Ohio.
“The industry will be very happy to see him out of there,” said Alan S. Kaplinsky, a lawyer with Ballard Spahr in Philadelphia, who represents financial institutions in matters before the bureau. “The people running that agency are definitely Obama people.”
The Trump administration, eager for Mr. Cordray’s exit, has compiled a list of successor candidates in the event of his early departure, according to three people with knowledge of the preparation. Yet Mr. Trump can fire Mr. Cordray only for cause, and such a move would most likely backfire by rendering Mr. Cordray a political martyr among Democrats — perhaps bolstering his chances of winning, should he enter the governor’s race.
Since Mr. Trump’s election, Mr. Cordray, 58, has counseled his roughly 1,600 employees to tune out the political noise.
“I encourage you to remain focused on doing your good work on behalf of consumers,” he said, according to a script for a call with employees in late November. “Keep calm and carry on.”
The agency was proposed by Senator Elizabeth Warren, Democrat of Massachusetts, when she was a Harvard professor, to serve as an advocate for consumers in their dealings with financial institutions. Mr. Cordray, who was working at the bureau as its enforcement chief, was made its first director in 2012 in a recess appointment by President Obama, which heightened the partisan rancor over the regulatory crackdown on Wall Street.
Financial executives and lobbyists offer mixed reviews of his tenure.
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They describe Mr. Cordray as intelligent, pleasant and accessible, willing to meet with industry constituents and hear out their lobbyists. But they also consider him a “doggedly ideological” — in the words of Richard Hunt, the chief executive of the Consumer Bankers Association, a banking trade group — leader of an agency that is structured like “a dictatorship.”
“Richard Cordray has gone above and beyond to take C.E.O.s to task on things that he had no jurisdiction over,” Mr. Hunt said.
Mr. Kaplinsky, the financial services lawyer, said Mr. Cordray had stifled innovation in the industry by being too rigid. “It is one guy who calls all the shots,” he said.
Mr. Cordray said he listened to and appreciated his opponents. “Sometimes you look at the critics and say, ‘Nobody else was telling me that, but you were,’” he said in a recent interview.
Since Mr. Trump has taken office, Mr. Cordray has faced increasingly personal attacks. A longtime critic, Representative Jeb Hensarling of Texas, the Republican chairman of the House Financial Services Committee, has led the charge.
Mr. Hensarling championed the Financial Choice Act, a bill approved by the House in June that would reverse many Dodd-Frank regulations, including curbing the consumer agency’s oversight powers and allowing the president to fire its director more easily. A vote has not been scheduled in the Senate.
He also launched an investigation over a contentious new rule that allows consumers to band together in class-action lawsuits against financial firms. Mr. Hensarling later suggested that there were legal grounds to pursue contempt-of-Congress proceedings against Mr. Cordray, accusing him of inadequately responding to subpoenas in that investigation.
Separately, Mr. Hensarling has questioned Mr. Cordray’s political activities in Ohio and called for an investigation into whether he violated a federal law that prohibits federal employees from most political campaign activities.
Mr. Hensarling’s office declined an interview request. He told The Dallas Morning News this year that the bureau “is the single most unaccountable and powerful agency in the history of our republic.” He said Democrats had “set up a tyranny” when conceiving the agency as part of the Dodd-Frank legislation.
While industry lobbyists are more circumspect, they, too, are eager to remake the bureau. Some in the banking industry would like it to disappear, but others would prefer simply to reduce its autonomy.
“I hope we’ll rebalance the pendulum in a way that ensures honest market participants have clear rules,” said David Hirschmann, who heads the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, “and those who break laws are appropriately handled through strong, vigorous enforcement.”
Mr. Cordray says the criticism is a badge of honor. He believes the bureau’s work will have lasting ramifications.
The bureau has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts.
This week, it began mailing out refund checks totaling $115 million to 60,000 people who had paid illegal fees to Morgan Drexen, a debt settlement company that collapsed two years ago.
The agency has also rolled out the arbitration rule, and it has been putting the finishing touches on a rule that could reshape the multibillion-dollar payday lending industry.
“This has been an agency that has gotten people’s attention in a lot of ways,” Mr. Cordray said. “They have a lot of things they say about us.”
War on Multiple Fronts
Mr. Trump has not spoken publicly about the bureau, but in mid-June, he received his first major report from the Treasury Department about the financial system and its regulators.
The assessment included recommendations to chisel away at the Dodd-Frank law, which the Treasury Department, under Mr. Obama, helped draft.
The consumer bureau figured prominently in the report, garnering 340 references and a chapter devoted to the opportunity that Republicans have to change it.
“The C.F.P.B. was created to pursue an important mission, but its unaccountable structure and unduly broad regulatory powers have led to regulatory abuses and excesses,” the report said.
Mr. Trump, who ordered the report, has made his disdain for the Dodd-Frank law clear, issuing an executive order and presidential memos calling for a rollback of Obama-era regulations — and empowering Treasury Secretary Steven Mnuchin to take the lead in doing so.
“Treasury took the reins,” said Mr. Hirschmann, of the U.S. Chamber of Commerce, who participated in meetings with Treasury staff members as they researched the report. “I’ve been impressed.”
Similarly, the Justice Department under Mr. Trump has taken some shots at the consumer bureau. In one court case, it sided with a mortgage lender questioning the agency’s constitutionality.
The bureau had fined the lender, PHH Corporation, $109 million and accused it of illegal kickbacks. PHH denied wrongdoing, appealed the ruling, claimed the bureau was unconstitutional and asked a judge to shut it down.
At a hearing in May before the federal appeals court for the District of Columbia, a Justice Department lawyer argued alongside industry lawyers and said the bureau’s structure was unconstitutional and should be changed. The court is not expected to rule on the case for several months.
Other alliances within the federal government have deteriorated.
The consumer agency had been collaborating with the Department of Education on overhauling the $1.3 trillion student loan market to ensure that private companies collecting loan payments abided by consumer protections.
But soon after Betsy DeVos was appointed education secretary this year, the department scrapped much of that work. In particular, the department eliminated a requirement that federal student loan servicers adopt a simplified repayment disclosure form that the consumer bureau spent years developing.
Lobbyists are also feeling empowered by the change in administrations. Working on behalf of payday lenders, they have flooded the consumer agency with comments, more than a million in all, urging it to halt a proposed crackdown on the industry.
At some payday loan counters, customers were handed comment forms alongside their checks and urged to tell the bureau just how important payday lending was to their livelihood. Hundreds of thousands of those comments, often with nearly identical wording, poured into government databases.
So far, that push has not deterred the bureau. Within the agency, there is a mounting sense of urgency to get the final version of the payday rules out, according to two people familiar with the process. The new rules would represent the first time that the lucrative market — the payday industry collects $7 billion annually in fees — was directly regulated by the federal government.
The bureau’s rollout last month of its rule allowing class-action lawsuits in some arbitration cases has also rattled Wall Street, and is widely seen as a provocative stance against the prevailing political momentum in Washington.
CreditJustin Gilliland/The New York Times
Opponents of the rule have received an assist from the Trump administration. Keith Noreika, the acting currency comptroller, who serves as the chief bank regulator, asked Mr. Cordray to delay publication of the rule, saying his staff needed more time to review whether it posed a threat to the safety and soundness of the banks.
Mr. Cordray, in a response to Mr. Noreika, said the idea that class actions were a threat to the banking system was “plainly frivolous.” (He also said he had already sent the rule to the Federal Register for publication a week before he received Mr. Noreika’s letter.)
A challenge to the rule passed the House, but has stalled in the Senate. Senator Lindsey Graham, Republican of South Carolina, has said he would not back a repeal of the rule. Other Republicans are also wavering.
“Moderate Republicans don’t want to be painted as anti-consumer,” said Isaac Boltansky, the director of policy research at Compass Point, a research firm tracking the fate of the agency’s recent rules.