"Today's action sends a clear message that it is illegal to make or accept payments for mortgage referrals," said CFPB Director Richard Cordray.
"Today's action sends a clear message that it is illegal to make or accept payments for mortgage referrals," said CFPB Director Richard Cordray. Image: Bloomberg News

Consumer Financial Protection Bureau Director Richard Cordray sent his strongest signal to date on Tuesday that he has no intention of resigning ahead of his term expiring next year even if asked to by President Donald J. Trump.

While Cordray specifically refused to comment on how he would respond if Trump sought to force him to resign, he staked out a position that suggested he was ready to fight.

"I was nominated and then confirmed by the Senate to serve a term," Cordray said in a half-hour public interview with editors at The Wall Street Journal. "All of the independent federal regulatory agencies have terms that overlap one administration to another. That's meant to preserve their independence. That's important because without the independence you end up mired in partisan politics. The big money special interests will try to dictate results and they shouldn't be able to dictate results. So the independence is an important principle worth fighting for and preserving."

Cordray, whose term does not expire until July 2018, emphasized that the agency has "an independent mandate to do what we do and we will continue working to protect consumers."

It remains unclear if the Trump administration will seek Cordray's removal. On Monday, White House press secretary Sean Spicer said that the administration had made "no decision" on the issue. Cordray on Tuesday declined to say specifically what he would do if he were asked to resign.

"I don't really want get into hypotheticals," he said. "By definition, any question that starts with an 'if,' I probably should stay away from."

Cordray also declined to give his opinion on whether the Trump administration, under current law, has the authority to remove him. A recent court case, PHH Corp. vs. CFPB, suggests that a sitting president may have a legal basis for removing the CFPB director. That case is being appealed.

"If you're asking now for my legal opinion, I think I should be reluctant to give it because it's the court that now has that in front of it and they are the proper party that will render the final legal opinion here," he said. "And whatever they say I'm sure we will all abide by. That's how it works."

It was a point he returned to often during his talk.

"Ultimately when the matter is finalized and the court's final decision is rendered, we will accept and embrace and implement that decision," he said.

The CFPB is also still digesting the Trump administration's executive order issued Friday that called for all departments and agencies to freeze regulations to allow agency heads selected by the president to review pending rules.

But Cordray said that the CFPB's agenda was unlikely to change under a Trump administration.

"In the grand scheme of things, it really shouldn't change the job at all," Cordray said. "Congress created us as an independent financial agency; that's been the nature of all the agencies at the federal level, overseeing all elements of the economy."

Congress "set us up with a term as they did with [Federal Reserve Chair] Janet Yellen and [Federal Deposit Insurance Corp.] Chair [Martin] Gruenberg that extends beyond one administration to the next, so we are expected to work with different administrations that have different points of view," Cordray said. "We do a lot of collaboration with different parts of the government."

Cordray also excoriated financial companies that had been hit with enforcement actions for engaging in deceptive practices.

"Keep in mind that we are a law enforcement agency," he said. "And it is not a comfortable thing for large financial companies to have somebody looking over their shoulder, making sure that they are complying with the law and holding them to account when they don't."

He cited the Wells Fargo phony accounts scandal as an example of abuse that needs to be corrected.

"With Wells Fargo, where frankly and I don't think anybody would deny this, there was abuse and exploitation of customers, opening accounts without their consent, without their knowledge so that people could make their own sales targets and performance bonuses," he said. "You know, that's wrong. That's wrong by anybody's measure."

The CFPB has been sharply criticized for engaging in what is known as rulemaking by enforcement, in which the bureau hopes to change industry behavior by engaging in a high-profile enforcement action rather than specifically issuing new rules.

House Republicans released a report last week charging that Cordray may have violated federal law when the agency cracked down on indirect auto lenders starting in 2013.

"On any hard issue that comes to me, there typically are lawyers advising on both sides of the issue," he said. "But in terms of law enforcement, I don't understand the criticism that we've been too aggressive in enforcing the law. If we're not going to enforce the laws aggressively, then what are we saying, that institutions can do anything they want, anything they like? That's not the right answer. Law and order is a pretty conservative issue. It's important to have the rules and make the rules stick."

Lawmakers have also weighed in on the fight in hopes of tipping the scales in Cordray's favor. Senate Democrats Chuck Schumer, D-N.Y., Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio, told reporters last week that they would oppose any move to remove Cordray and would expect him to take legal action if the Trump administration attempted to remove him.

On Tuesday, the Congressional Black Caucus, led by the top Democrat on the House Financial Services Committee, Rep. Maxine Waters, D-Calif., also wrote in a letter to Trump that "we would strongly oppose any attempt by your administration to remove Director Cordray before the expiration of his term on July 15, 2018 and would view such an action as an illegitimate abuse of power."

If the courts decide in the PHH Corp. case that the president doesn't have the legal means to remove the CFPB director, there is a belief that the Trump administration may try and fire Cordray "for cause" which would set a much higher bar for removal.

Some have speculated that the administration may try and point to articles in National Mortgage News that uncovered evidence black minorities were less likely to receive the same pay as white employees. Cordray acknowledged errors with the pay performance system before scrapping it entirely. The agency also gave affected employees $5 million in remediation.

"We write to underscore to you that we are aware of no facts that would support Director Cordray's removal, even under any of the steepest legal standards," the Black Caucus wrote. "We are especially troubled by suggestions that your administration is seeking to twist Director Cordray's attempts to address discrimination allegations within the CFPB as cause for removal."

Ian McKendry contributed to this article

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