Richard Cordray, director, Consumer Financial Protection Bureau. Credit: Diego M. Radzinschi / ALM

Richard Cordray, director of the Consumer Financial Protection Bureau, has been cleared of allegations that he improperly positioned himself to run in Ohio’s gubernatorial contest while leading the Obama-era agency, according to a newly disclosed letter from the government office that enforces restrictions on federal employees’ political activity.

Cordray, a former Ohio attorney general and treasurer, has been pressed for months by rumors of his interest in the 2018 governor’s race—a suspicion that has prompted speculation from critics about whether he violated the Hatch Act, a federal law that imposes restrictions on government employees for engaging in political activity.

Cordray has steadfastly remained mum about any plans to run for Ohio governor, inviting speculation that he will leave his post as CFPB director before his term expires in July 2018.

In July, U.S. Rep. Jeb Hensarling, the Republican chairman of the House Financial Services Committee and long a critic of Cordray, called on the Office of Special Counsel to investigate the CFPB director for a potential violation of the Hatch Act. Hensarling pointed to media reports about a potential Democratic challenger in the race being asked if he would stay out of the primary if Cordray entered, according to a report by Cleveland.com.

A Republican-aligned opposition research group, America Rising Squared, also submitted a complaint with the Office of Special Counsel, and the Republican Governors Association has filed a Freedom of Information Act request seeking documents about any campaign activities by Cordray.

The Office of Special Counsel, in an Oct. 12 letter to Cordray, said it had “found no evidence that you have violated the Hatch Act.” Cordray could have faced reprimand—up to removal from office—if found to have violated the law.

“The complaints OSC received alleged that you violated the Hatch Act by engaging in preliminary activities regarding a candidacy for Governor or Ohio,” wrote Erica Hamrick, deputy chief of the Office of Special Counsel’s Hatch Act unit. “OSC’s investigation, however, found no evidence that you have engaged in any of the types of preliminary activities directed toward candidacy that would violate the Hatch Act. Accordingly, we are closing our file without further action.”

The CFPB declined to comment on the letter or provide details about the office’s investigation into Cordray.

During his tenure leading the CFPB, Cordray has routinely returned on weekends to his home in the Columbus suburbs. In recent months, separate trips to Cleveland and Cincinnati have spurred speculation about any political aspirations.

Cordray has used those trips—in one, he attended the Ohio AFL-CIO’s Labor Day picnic in Cincinnati—to deliver speeches extolling the CFPB’s work under his watch.

Many lawyers in the CFPB orbit believe Cordray is, in fact, interested in entering the gubernatorial race but has remained at the agency to push through one of his signature accomplishments: a rule giving more power to consumers to sue banks in court.

This week, President Donald Trump signed legislation nullifying that new regulation. At the signing ceremony, Hensarling pressed for Cordray’s ouster, CNBC reported.

Hamrick said in her letter to Cordray that the Hatch Act has been interpreted to prohibit preliminary activities for a campaign, such as holding a press conference about a candidacy, soliciting donations or “giving consent to or acquiescing in such activity by others on the [federal] employee’s behalf.”

“However, merely discussing with family or close friends the possibility of running; fact-finding to learn what would be required to run; or making inquiries to understand the current political landscape would not violate the candidacy prohibition of the Hatch Act,” Hamrick wrote.

Hensarling has repeatedly sought answers about Cordray’s political ambitions, only to be stiff-armed. In August, Hensarling set a deadline for Cordray to state whether he plans to resign to run for governor. Cordray told the Texas Republican that he had asked “the same question a third time, and my answer remains the same.”

“You ask whether I intend to serve my full statutory term as the director of the Consumer Financial Protection Bureau or whether there is some other specific date on which I plan to resign,” Cordray said. “At this time, I have no further insights to provide on that subject.”

The Office of Special Counsel letter is posted below:

 

 

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