* Prospect of Trump appointee puts firms on enforcement front foot
* Some firms stalling settlement talks in hopes of better deal
* Trump appointee less likely to sue firms if they don't play ball
By Michelle Price
WASHINGTON, Nov 17 (Reuters) - The bargaining positions have shifted for financial firms in the crosshairs of the U.S. Consumer Financial Protection Bureau (CFPB) after its director announced this week he would be leaving.
The departure of Richard Cordray at the end of the month gives companies being pursued by the CFPB for alleged predatory lending practices added incentive to stall settlement talks until Republican President Donald Trump puts his own appointee in place, lawyers and analysts say.
Wall Street has long-expected Trump to nominate a CFPB head who will go easier on the industry and some companies such as student loan servicer Navient and lender TCF National Bank already have gone to court to fend off large fines while Cordray - renowned for imposing steep penalties- is still in place.
A Navient spokeswoman said in an email the company would focus on defending itself against the CFPB's "unfounded and politically motivated" allegations that it misled millions of borrowers, driving up their loan repayment costs.
A TCF spokesman rejected the CFPB's claim that the company "tricked" consumers into costly overdraft fees, saying in a statement TCF had "complied at all times with the letter and spirit" of the law.
Behind the scenes, other firms have been dragging out settlement talks - spending months wrangling over the extent of their liability, how consumers should be compensated and penalties calculated - all the while hoping for a sympathetic regime change, several lawyers working on dozens of cases told Reuters.
These companies will be emboldened to continue to hold out for better settlement terms in the belief new leadership at the CFPB will be unlikely to take them to court if they do not play ball.
THE CFPB, created by Democratic President Barack Obama in the wake of the 2008 financial crisis, is a lightning rod for criticism by Republicans, who argue that it has too much power.
"There is a more likely prospect for companies to get good settlement terms, in part because many would be willing to walk away from the negotiation table," said Quyen Truong, a partner at law firm Stroock & Stroock & Lavan who was the assistant director and deputy general counsel for the CFPB until early 2016.
"There is little doubt that litigated cases ultimately would play out under new Republican leadership who would be much less inclined to pursue aggressive claims than the current CFPB leadership."
The CFPB did not respond to a request for comment on how it would handle pending enforcement actions under a new director, but in a statement on Wednesday Cordray said he trusted new leadership would see the "value" of the agency's efforts and "work to preserve it."
Cordray is the CFPB's first and only director and under him it has pursued auto dealers, student lenders and credit card companies for alleged consumer abuses - forcing them to pay about $12 billion in fines and remedies, according to its own data.
Consumer advocates say the agency plays a critical role protecting consumers against financial abuse but Republican Party members, legal experts and defendants say it has repeatedly pursued cases outside its jurisdiction.
A Trump appointee likely would review all the CFPB's pending litigation and pre-litigation enforcement actions, and could ultimately drop borderline cases or move to swiftly settle them on generous terms, lawyers and analysts said.
They highlighted the CFPB's current actions against TCF, Navient, mortgage servicer Ocwen Financial Corp. N>, mortgage company PHH Corp. and consumer finance group World Acceptance Corp. as cases that might be quickly resolved. Shares in these companies closed up on Wednesday, when Cordray announced his departure.
“We have been and remain open to dialogue with the CFPB regarding its concerns, regardless of Mr. Cordray’s involvement with the bureau," the TCF spokesman said. "We will continue to work through the legal process."
OcWen, PHH Corp and World Acceptance did not respond to requests for comment.
"If it's the kind of case where I feel that Cordray and his staff have been pushing the envelope ... then, yeah, I’d want to make sure that I didn’t enter into a consent order with the bureau before there is a director in place that has taken a fresh look," said Alan Kaplinsky, co-practice leader of the Consumer Financial Services Group at law firm Ballard Spahr.
Kaplinsky was not referring to any specific case. (Reporting by Michelle Price; Editing by Carmel Crimmins and Bill Trott)