U.S. consumer watchdog chief Cordray tests Ohio's election waters

CINCINNATI (Reuters) - Democrat Richard Cordray delivered a campaign-style stump speech at a sprawling Labor Day celebration on Monday, but the U.S. Consumer Financial Protection Bureau chief stopped short of saying whether he intends to run for governor of Ohio.

FILE PHOTO: Consumer Financial Protection Bureau Director Richard Cordray speaks in Washington, October 17, 2014. REUTERS/Larry Downing

If Cordray were to step down to run for political office it would allow President Donald Trump to appoint a successor as head of the consumer watchdog agency, which has stoked the ire of Wall Street with steep penalties for misconduct and tougher rules on lending.

“We need to join together to help each other rekindle the hope, the enthusiasm, and the willingness to find and make our own opportunities,” Cordray said to hundreds of union members, a key Democratic constituency, at an AFL-CIO picnic in Cincinnati.

Cordray is the first director of the CFPB, a consumer watchdog agency created under former President Barack Obama in the aftermath of the 2007-2009 financial crisis.

An Ohio native, he has been widely expected to jump into the race for governor and clearly appeared to be testing the political waters with his speech on Monday.

Though many had speculated he would use the occasion to announce his candidacy, activists and political leaders said any formal announcement about Cordray’s plans to enter the 2018 contest would wait until the CFPB finalizes a long-awaited rule restricting the activity of payday lenders.

Current Ohio Governor John Kasich, among more than a dozen Republican candidates to be defeated by Trump in last year’s presidential primary campaign, is barred by term limits from running again in the pivotal election battleground state.

As CFPB director, Cordray has rained down steep penalties on banks, auto dealers, student lenders and credit card companies for alleged predatory lending practices. His reputation as being tough on banks and sticking up for consumers has many Democrats saying he is their best hope for taking the governors mansion, and chipping away at Republicans’ dominance in state government.

Due to a law forbidding public officials from using their office to advance political campaigns, Cordray would have to resign to run for governor. His term does not expire until next summer, when Democrats will already have selected their gubernatorial nominee in primary elections.

Members of both parties have said Trump would seize on a vacancy at the top of the CFPB to make good on campaign promises to slash regulations and weaken or perhaps even dismantle the agency.

Republicans have long fought to take the agency apart, saying it oversteps its authority and that the single director, who both writes and enforces rules, has too much power.

The agency itself has repeatedly declined to comment on Cordray resignation rumors.

CFPB critics say Trump could use a 1998 law to slide in a current administration appointee, already confirmed by Congress, as temporary director if Cordray resigns. A legal ruling that Trump can fire Cordray is currently under appeal.

“He’s done a great job and I don’t think he should leave for any reason,” said Karl Frisch, executive director of the liberal group Allied Progress.

Additional reporting by Pete Schroeder in Washington; Editing by Bill Trott and Tom Brown