Sen. Chuck Schumer (D-N.Y.)
Image: Bloomberg News

Top Democrats vowed Tuesday to defend the Consumer Financial Protection Bureau, predicting Director Richard Cordray will file a lawsuit if he were fired by Donald Trump after he is sworn in as president.

Sens. Chuck Schumer of New York, Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts — all members of the Banking Committee — told reporters on a conference call that Cordray would legally challenge any attempt to remove him before his term ends in July 2018. The Trump transition team signaled last week that the president-elected is at least considering such a move.

"Do not tell Richard Cordray he's fired," Sen. Schumer said in comments directed at Trump. "We think the odds are high a legal challenge would work, and we are urging the administration to forgo that long process and keep Cordray."

A CFPB spokesman declined to comment Tuesday on Democrats' remarks or Cordray's willingness to file suit if he were forced out. However, the agency has said previously that Cordray has no intention of resigning.

Cordray likely would file a temporary restraining order or an injunction if Trump sought to fire or remove him from office, Schumer and Warren said.

"No agency head has been fired for cause for a century — it is an extreme and unprecedented step," Warren told reporters on the 25-minute conference call. "It would be a real battle."

Committee Democrats also sent a letter Tuesday to Cordray praising his leadership and "tough law enforcement against financial fraud," which they called "the guiding star" of his tenure. Cordray's more than 150 enforcement actions against various companies had returned $12 billion to an estimated 29 million consumers, the Democrats noted.

Last week former Rep. Randy Neugebauer, R-Texas, met with Trump to interview for the CFPB spot on Wednesday, senior Trump spokesman Sean Spicer told reporters, according to a report by The Huffington Post.

Under the Dodd-Frank Act, Cordray can only be fired "for cause," which is defined as "inefficiency, neglect of duty or malfeasance in office." Some lawyers have said the Trump administration is building a "for cause" dossier against the CFPB chief.

"There is no conceivable way that Cordray could be fired for cause," Schumer continued. "This would be unprecedented. There is no cause available to go after him [for] other than something that is trumped up, manufactured."

When asked if he would be willing to replace the director with a five-member commission as repeatedly proposed in legislation, Schumer said: "No."

Brown said that even if a commission structure was established for the agency, Republicans could slow-walk potential appointments to hamper the agency. He cited the example of former Banking Committee Chairman Richard Shelby, R-Ala., who refused to hold nomination hearings and created a number of vacancies at agencies like the Securities and Exchange Commission and the Export-Import Bank.

"We deal with commissions, we deal with the [Export-Import Bank], we deal with the SEC," Brown said. "These are commissions…Shelby would move on none of these so we had an Ex-Im Bank that simply couldn't perform its full duties and that is what will happen here. This whole idea of a commission is to emasculate the agency and slow everything down and take away its power and stop it from acting."

Republicans have urged the president-elect to rely on a recent U.S. appeals court decision that struck down language in Dodd-Frank that said the CFPB's director could only be fired "for cause." That decision has been temporarily stayed pending an appeal.

"Right now that is the law, and it's the only tool available to the president-elect, which is firing for cause, and [that] has not happened in the U.S. in the last 100 years," Warren said.

The CFPB is in the process of issuing rules on arbitration, payday lending and debt collection, issues that Democrats are rallying progressives, consumer advocates and civil rights groups to fight for.

"First, there is the terrible publicity they will get, they will hear from hundreds of thousands of people, and then there are the legal actions" that could come from Cordray, Brown said. "Republican senators and House members…are going to see a huge pushback from the country."

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry