As you may have heard by now, Obama era Consumer Financial Protection Bureau (CFPB) chief Richard Cordray has his eyes on a new government job, this time as governor of Ohio. This month he released his first campaign advertisement, reminding people of his humble origins working at McDonald’s. He also mentions his tenure as Ohio’s treasurer and Attorney General. But he really focuses on his time running the CFPB. But his main claim to fame has some serious holes in it as you’ll see in a moment. Here’s the ad. (, emphasis added)

The jobs we do tell a story about who we are. Mine starts right here. I learned the value of hard-earned money. Ever since, it’s been my mission to protect yours. As treasurer, I helped people across Ohio save their homes from foreclosure. As attorney general, I stopped predatory lenders who hurt taxpayers. As the nation’s consumer watchdog, I took on Wall Street and won. Got back $12 billion for people who were cheated. As governor, I’ll see to it that your hard work pays off.

It’s a heartwarming story, isn’t it? Local kid makes good. Goes to Washington like Mr. Smith. Takes on the evil bankers on Wall Street. Makes them pay and hands out money to all the good little boys and girls. But there’s a serious glitch in the narrative that Cordray is trying to spin. It’s true enough that he managed to get some investment banking firms to cough up a bunch of money and give it to Uncle Sam. But the consumers who were cheated never saw much of that cash. The reason is found in the CFPB’s own rules which turn it into more of a liberal slush fund than any sort of compensatory avenue for the consumer.

Let’s look at the rules the CFPB set up for compensation from the bureau’s Civil Penalty Fund. Read carefully. (Emphasis added)

In accordance with the Dodd-Frank Act and the Bureau’s Civil Penalty Fund rule, the Fund can only be used for two purposes: to compensate eligible harmed consumers and, to the extent that victim payments are not practicable, to provide funding for consumer education and financial literacy programs. If victims cannot be located or it is otherwise not practicable to pay victims, the Bureau may keep the money in the Fund for victims in future cases, or the Bureau may use money in the Fund for consumer education and financial literacy programs.

Shorter translation of two key terms: When they say “victim payments are not practicable” they mean most of the time. And the term “consumer education and financial literacy” means advertising campaigns which were little more than thinly disguised propaganda for liberal causes. Of those two options (giving money to injured consumers or keeping it for their advertising fund), which direction do you think most of the cash went? Forbes looked into it a couple of years ago and found that the average consumer in class action lawsuits against the investment banking industry received a whopping $32. The rest went to the CFPB. (Emphasis added)

Consumers will reap $342 million a year in payments from those new federal class-action settlements, the CFPB reckons, although elsewhere in the report the agency acknowledges some discouraging statistics about what that really means to the average customer. The agency studied 251 class actions and found an average payout of $32, and that number was skewed upward by $1 billion in settlements in a overdraft cases that accounted for the bulk of the money in the study period. Elsewhere in the report, the CFPB says 87% of class actions resulted in no payment to consumers and even in those that did have favorable settlements, the weighted average claims rate was 4%.

That fits with other studies showing the odds of anybody collecting money in a class action are less than 1 in 400, or less than the odds of a straight flush in a 7-card poker hand.

This isn’t some vague study from a private interest group. Those numbers come straight from the CFPB’s bean counters. If you trusted the Bureau under Cordray’s leadership to get your money back from a Wall Street firm you were more likely to get a refund from mob shylock. So don’t listen to Cordray’s advertising about how he fought the big banks and landed a bunch of money for consumers. That cash went into the CFPB’s coffers, not your pockets.