Why a Financial Literacy Champion is on the Hot Seat
By Dan Kadlec
January 24, 2017
What executive order will President Donald Trump sign next? Let’s hope it is not one that dismisses Richard Cordray, who as the first director of the Consumer Financial Protection Bureau has proven to be a strong advocate for financial literacy.
Trump has been busy his first few days in office signing all kinds of orders that dismantle Obama policies. The CFPB is an Obama-era creation and has been in the crosshairs of Republicans from the start. Rumors have been flying for a week that Trump is about to deliver his “You’re fired!” line to Cordray.
Trump’s team interviewed former Texas Congressman Randy Neugebauer for the job. But on Monday Sean Spicer, Trump’s spokesman, said no decision had been made. It’s not clear that Trump has the authority to make such a change. But let’s hope he doesn’t even try.
The CFPB was created in the aftermath of the financial crisis and given a broad charter and lots of leeway to protect consumers. Some Republicans think Cordray has overstepped and see him as a rogue regulator with such a heavy hand that he is stifling innovation and profits in the lending business and leaving consumers with higher costs and fewer options.
Others applaud Cordray for reining in financial firms’ misleading sales pitches and other practices, and for taking on big banks as well as alternative finance companies including predatory payday lenders and pawnshops.
No matter how you view it, there is no denying the CFPB has been on a tear. On Monday, the bureau sued CitiFinancial Servicing and CitiMortgage over claims related to foreclosure practices. That came just days after filing suits against TCF National Bank and student loan servicer Navient.
Is Cordray too much of a pit bull? No one is making that claim as it relates to his financial literacy programs. Cordray has taken up the mission in earnest; he’s made great strides, and has advanced financial education globally.
“Empowering people to take more control over their economic lives is essential to our mission,” Cordray wrote in last year’s annual report on financial literacy. “We are committed to helping all consumers increase their own capability to make sound financial choices.”
These aren’t just words. Under Cordray, they have been a guiding principle in the CFPB’s work to improve individuals’ personal financial capability. The bureau has created useful online tools like Ask CFPB, a site that provides impartial information on hundreds of money topics and has attracted 12 million visitors.
The bureau has spearheaded research to identify and share the most effective approaches to teaching kids about money. It has developed a financial well-being measurement system that helps educators set goals for financial knowledge. It has identified the childhood building blocks that lead to financial empowerment, and has positioned itself as a collaborator that identifies education gaps and proposes solutions. Its Youth Financial Education Curriculum Review leads teachers to classroom resources.
These are meaningful steps toward a more financially literate population. If Cordray is dismissed, or the CFPB is disempowered, it would be a blow to the effort to raise the financial know-how of ordinary Americans and people around the world.
Trump cares about financial education. He prizes hard work, resilience and determination, and financial know-how to make the most of those traits. If he lets go of Cordray perhaps he’ll find a replacement with equal zeal for the mission. But that seems unlikely—and why take the chance.