House Democrats sent a letter Tuesday to President-elect Donald J. Trump, urging him to reject calls by Republicans to fire Richard Cordray, the director of the Consumer Financial Protection Bureau.
The letter, signed by Rep. Maxine Waters, D-Calif. and 20 other Democrats on the House Financial Services Committee, cautioned Trump against "entering into a protracted – and likely unsuccessful – legal battle to oust" Cordray before his term expires in July 2018.
"Any attempts to remove Director Cordray from his position are without historical precedent, and intended solely to distract the director and the bureau from its important work protecting servicemembers, students and other borrowers from financial predation," the lawmakers wrote. "We caution you not to engage in partisan litigation, particularly since it is likely to be unsuccessful and will needlessly divert government resources away from other important priorities."
House Democrats are hoping to avert a collision course with Trump because firing Cordray could devolve into a nasty legal and political showdown over the limits to executive power.
A key question is whether Trump will attempt to fire Cordray soon after assuming the presidency. Under the Dodd-Frank Act, Trump can only fire a director "for cause," but a court decision in November struck down that language, saying a president could fire a director for any reason. That decision, however, has been stayed pending appeal.
House Democrats wrote that removing Cordray "for cause" would be an "extraordinary remedy whose use must be subjected to enhanced congressional, judicial, and public scrutiny."
"While we understand that many powerful special interests would like to see Director Cordray leave, we urge you not to bow to their demands to initiate costly, meritless litigation, and we stand ready to oppose any efforts you may make to do so," the letter stated.
Their letter came as two Republican senators sought Tuesday to stake out a legal justification for firing Cordray. Much of the Democrats' letter addressed past allegations of discrimination at the bureau that could used to justify removing Cordray.
In 2014, the Oversight and Investigations subcommittee of the House Financial Services Committee held a series of hearings into allegations that the CFPB had discriminated against minorities. The hearings came in response to stories in American Banker that showed whites were more likely to receive higher pay than minority employees. The CFPB ultimately scrapped its pay system as a result and paid back $5 million to affected employees.
"In response to these allegations, Director Cordray was upfront in acknowledging the challenges he faced in starting up a new federal agency, including dealing with staffing issues and developing a management structure from scratch," the letter stated. "Director Cordray did not hide from the intense congressional scrutiny during this time."
The letter described at length the efforts Cordray has taken to reduce discrimination at the agency he had led. Last year, a Government Accountability Office report found that roughly 25% of African-American, Asian and female employees of the CFPB who responded to a survey experienced discrimination at the agency.
Democrats also referred in the letter to the Wells Fargo scandal by stating that the bank's $190 million settlement in September over charges that employees opened 2 million phony accounts would not have happened without Cordray's leadership.
The lawmakers also noted that the CFPB "is well on its way to completing rulemakings to both stop the payday lending debt trap and to rein in forced arbitration clauses that deny consumers their day in court."