The chair of the Consumer Financial Protection Bureau, Richard Cordray, has been the topic of some speculation for a while now. It seems more and more likely that when his term as CFPB chief is up this July, he’s going to begin campaigning for Ohio governor.
There are a few narratives here to thread together, so bear with me.
First: The CFPB is expected to roll out any day now new regulations curtailing the payday loan industry. Cordray, a Democrat, will do so for two reasons. The first reason is that Democrat rank and file would like it. The second, and far more sinister reason, is that it would please almighty Google.
You see, Google invested heavily in a couple of personal lending services, LendUp and Lending Club. Our own Neil Stevens wrote about Google’s quiet war against payday loans back in 2016.
If you haven’t heard, Google is banning payday loan firms from advertising on their ad network (the biggest in the world). Now, superficially it sounds like they’re trying to be good guys (though paternalistic, much like the Obama administration in fighting payday loans). But it turns out there’s a much simpler reason they’d want to do this: competition.
You see, in 2013, Google dropped $1.5 Billion in LendingClub, a “peer to peer lending” online service that offers small personal loans, among the options available.
Interest rates very for LendingClub personal loans, but they go as high as 34%. That doesn’t sound as high as payday loans, which have annualized rates much higher, but the LendingClub loans collect that interest over a much longer period.
No one here is under any misconception: Google is a liberal company with liberal views that it likes to enforce. And, it doesn’t mind issuing consequences if they deem you are wrong on the subject.
Now, along with laying out this groundwork, Cordray recently spoke at an AFL-CIO event talking some pretty Democrat Political Talk.
Much of his speech focused on “financial inequality,” which includes unequal access to financial services and credit. Mr. Cordray said financial inequality exacerbated income inequality to make life harder for many Americans, adding that the CFPB has worked to mitigate those problems.
“What I have learned from my time leading the consumer bureau is this: Our willingness to stand up for what is right, regardless of the obstacles, can make a real difference,” Mr. Cordray said. “If we do not push back on the forces that press people down, we are allowing America’s promises to go unfulfilled.”
That’s not CFPB talk – that’s “I’m Running” talk if I ever heard it. Cordray has made no clear indication that he is running, but he hasn’t denied it, which is a pretty strong indicator. He will also likely get major Democratic endorsements from Elizabeth Warren and others.
The final narrative to tie into all of this: The Republican Party is doing everything in its power to curtail the CFPB’s (and, therefore, Cordray’s) power. If he gets this payday loan rule rolled out effectively, and then heads out to run for governor of Ohio, he’s got some headwind among Democrats.
And some sweet, sweet Google love won’t hurt him either.