With President Obama’s reelection and control of the Senate remaining firmly in control of the Democrats, the CFPB’s hand has strengthened. I had been saying all along that even if Mitt Romney became President, it was unlikely that there would be any weakening of the CFPB until at least 2014 when Romney would have had the opportunity to appoint a new director. As things now stand, it is unlikely that there will be any significant change in direction at the CFPB throughout Obama’s next term unless a court were to rule that his recess appointment of Cordray was invalid or unless the Democrats in the Senate show a willingness to agree to amending Dodd-Frank to substitute a 5 member commission for a single director in exchange for something else for which they need Republican support in the House (e.g., tax reform). With Elizabeth Warren’s election to the Senate, it seems less likely that the Democrats are going to be willing to make any changes to the structure of the CFPB.

Thus, the CFPB has been given a clear signal that it does not need to change its direction. While Cordray could elect to serve out the remainder of his term in 2013, most pundits believe that he will resign during the third quarter of next year to return to Ohio to run for governor. At that point, Raj Date will succeed him as Acting Director.

The only thing that could upset the applecart is if a court were to rule that Cordray’s appointment was invalid. If that were to occur, the CFPB’s supervision and enforcement initiatives related to non-banks would be invalid. Any regulations promulgated by the CFPB might also be invalid. There would then be a lot of pressure on Obama and the Senate Democrats to barter with the Republicans. That could result in significant CFPB reform. However, unless and until that happens, it will be business as usual for the CFPB and the financial institutions that it exercises jurisdiction over.