WASHINGTON–Who’s in charge at the Consumer Financial Protection Bureau?
The agency’s leadership has been thrown into some turmoil after outgoing director Richard Cordray appointed a successor, only to be followed by President Trump appointing an interim director. Cordray’s appointed successor, Leandra English, filed a lawsuit on Sunday night to keep anyone but her from overseeing the CFPB.
English had been the CFPB’s chief of staff, was elevated to deputy director by Cordray and then became acting director when Cordray resigned.
On Friday, Trump named Mick Mulvaney, who is currently director of the U.S. Office of Management and Budget, as the interim director. Trump and Republicans have been seeking to dial back the CFPB, and Mulvaney is a long-time critic who once called the agency a “sad, sick joke,” as CUToday.info reported here.
Over the weekend, Trump tweeted that the CFPB has been a “total disaster” and then added “We will bring it back to life!”
The question today is how this will play out and which laws apply. Both Cordray and the White House have pointed to different laws to support their positions. There is disagreement over which laws apply to the CFPB, which was created as part of the mammoth Dodd Frank legislation following the financial crisis.
Now the courts have been called upon to resolve the leadership issue. English’s suit, filed in the United States District Court for the District of Columbia, seeks a temporary injunction to stop Mulvaney’s appointment.
“The President’s attempt to appoint a still-serving White House staffer to displace the acting head of an independent agency is contrary to the overall statutory design and independence of the bureau,” the lawsuit states.
The suit asks the court to declare English is the agency’s acting director and not Mulvaney. In her filing, English is basing her argument on wording in the Dodd-Frank Act that states in the “absence or unavailability” of its director, the bureau’s deputy director is to step in as its acting head.
In naming Mulvaney to the post, the Trump administration cited the Federal Vacancies Reform Act as the basis for its authority to make the move.
In his resignation letter, Cordray said English would serve as the agency's acting director until a replacement could be confirmed by the Senate, saying the move would “minimize operational disruption and provide for a smooth transition given her operational expertise.”
On Friday, the White House later issued a statement that “The President looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB's dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities.”
Mulvaney is expected to remain head of the OMB until a permanent CFPB director is nominated and confirmed.
In response to the uncertainty at the CFPB, CUNA CEO Jim Nussle issued a statement saying “Director Cordray’s final act illustrates so clearly why a commission overseeing CFPB would be superior to the single director model. With a commission in place there would be no opportunity for a lame duck appointee to select a non-Senate confirmed citizen to lead an agency with such an unaccountable structure governing the entire financial services marketplace. A CFPB commission would ensure that leadership at this agency — like so many others — continues without disruption. We continue to urge Congress to enact legislation replacing this structure with a multi person, bipartisan commission.
“In the meantime, we’re committed to working with CFPB's new leadership to address the problems that pending and final rules have caused credit unions and their 110 million members, and move towards a new approach that recognizes the exceptional consumer protections credit unions provide, while continuing to address abusers of consumers,” Nussle continued.