Battle lines over Director Cordray’s future at the CFPB are predictably forming along party lines.  Earlier this week, two Republican senators sent a letter to Vice President-elect Pence urging Director Cordray’s removal by President-elect Trump.  Also earlier this week, a group of 21 Democratic members of the House Financial Services Committee, including ranking member Maxine Waters, sent a letter to President-elect Trump “to caution [him] against entering into a protracted-and likely unsuccessful-legal battle to oust [Director Cordray] before his term expires in July 2018.”

In their letter, the Republican senators assert that the CFPB is unconstitutionally structured, pointing to the D.C. Circuit’s PHH decision as support.  The senators argue that despite the CFPB’s petition for en banc rehearing in PHH, “the president retains constitutional authority to remove the director until a valid court order says otherwise.”  (We previously blogged about an article written by a University of Virginia School of Law associate professor that asserted the new President could remove Director Cordray before the PHH appeal is resolved if the Executive Branch determines that the Dodd-Frank Act’s “for cause” restriction on removal is unconstitutional.)

The Democratic lawmakers do not mention the PHH decision in their letter and appear to assume that the new President could only remove Director Cordray “for cause.”  They defend Director Cordray’s efforts to respond to allegations of discrimination at the CFPB and promote diversity and inclusion.  The lawmakers claim that “no President has ever removed an independent agency head for cause,” urge the President-elect “not to bow to [the demands of many powerful special interests that would like to see Director Cordray leave] to initiate costly, meritless litigation,” and announce that they “stand ready to oppose any efforts [the new President] may make to do so.”

Since the CFPB is often described as Senator Elizabeth Warren’s “brainchild,” it is not surprising that she is reported to be rallying consumer advocates and others to launch a campaign to defend the CFPB.  According to American Banker, speaking on a conference call sponsored by Americans for Financial Reform, Senator Warren told the 3,000 consumer advocates participating in the call that a grassroots effort is necessary to protect the CFPB from Republican efforts to restructure the agency and to test whether the Trump administration and Republican lawmakers are prepared to battle with Democrats and consumer advocates over the agency’s future.  (Americans for Financial Reform describes itself as “a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups.”)

American Banker reports that “progressives plan to flood Congressional offices with demands to defend the CFPB and Dodd-Frank just as various constituencies targeted House Republicans last week when they sought to gut the little-known Office of Congressional Ethics.”

According to Politico, President-elect Trump met earlier this week with former Republican Congressman Randy Neugebauer, who previously chaired the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee.  While serving in Congress, Mr. Neugebauer was a strong proponent of CFPB reform.  American Banker has reported that Mr. Neugebauer is being considered as a possible replacement for Director Cordray.