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The Ghost of Richard Cordray


Richard Cordray in 2018.


Photo:

John Minchillo/Associated Press

Sometimes it feels as if

Richard Cordray

is commanding his former minions at the Consumer Financial Protection Bureau from exile like Lord Voldemort in Harry Potter. Witness the bureau’s lawsuit last week against Citizens Bank for transgressions it long ago disclosed and rectified.

The bureau claims that Citizens violated the Truth in Lending Act from 2010 to 2015 by failing to refund charges that customers said were erroneous. According to the lawsuit, Citizens made customers sign fraud affidavits under threat of perjury that the customers had not authorized the charges they had complained about.

CFPB also grouses that the bank directed customers with overdue bills who called for credit counseling to a debt collection department, while customers in good standing were directed to a general customer service line. Citizens says the lapses affected a mere 2% of its 1.2 million credit card customers. It also says it rectified and disclosed the issues to the CFPB soon after discovering them. “The bank did not receive a single customer complaint during or after the remediation,” Citizens says.

Five years later the bureau is pouncing even though the one-year statute of limitations that governs its legal claims has expired. The lawsuit recalls Mr. Cordray’s drive-byes against businesses during the Obama Administration. But President

Trump’s

appointee

Kathy Kraninger

has promised to focus on preventing consumer harm and to encourage self-reporting by financial institutions.

So what’s going on? We noticed that the four CFPB attorneys who signed the lawsuit are holdovers from Mr. Cordray’s tenure. Perhaps the bureaucracy is too unwieldy for Ms. Kraninger to manage, which would be ironic given how much power the Dodd-Frank Act gives the director.

The Supreme Court next month will consider whether the bureau’s structure violates the Constitution’s separation of powers by vesting power in a single director who supposedly can’t be removed at will by the President and whose budget isn’t subject to Congressional appropriations. The Citizens lawsuit is evidence that this structural lack of accountability cedes too much power to an unelected bureaucracy.

The week’s best and worst from Kim Strassel, Bill McGurn and Dan Henninger. Image: David Cliff/Zuma Press

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