Finding a new director for the Consumer Financial Protection Bureau sounds pretty dull, but since the Trump administration doesn’t do noncontroversial, the process involves a partisan battle over the president’s attempt to undermine his predecessor, a dramatic showdown involving dueling appointees showing up to the job on Monday, and now, a lawsuit.
The agency — which was conceived of by Senator Elizabeth Warren when she was a bankruptcy professor at Harvard Law School — aims to prevent financial institutions from scamming Americans. That’s made it popular with the public, but despised by banks, credit-card companies, and the Republican lawmakers who love them.
CFPB directors serve five-year terms, and Obama appointee Richard Cordray — the first person to hold that position — was set to serve through July of next year. But Cordray triggered a succession crisis when he announced his resignation on November 15.
The eventual permanent CFPB director must be confirmed by the Senate, but the 2010 Dodd-Frank Act, which created the agency, says that in the meantime the deputy director will take over if the director steps down. Last week, Cordray appointed his chief of staff, Leandra English, as his deputy, intending for her to serve as acting director until Trump makes his nomination.
But the president had other ideas. Citing the Federal Vacancies Reform Act, which lets the president fill an open executive-agency leadership position with any Senate-confirmed member of his administration, Trump said that budget director Mick Mulvaney would assume the role. Mulvaney, who once called the CFPB a “sick, sad joke” was expected to continue heading the Office of Management and Budget and delegate the work of running the agency (presumably, into the ground).
So now, with two CFPB directors expected to show up to work on Monday, the matter is headed to the courts. On Sunday, English filed a lawsuit in the U.S. District Court of D.C. calling herself the “rightful acting director” and requesting a temporary restraining order to prevent Mulvaney from being appointed to the job.
“Ms. English has a clear entitlement to the position of acting director of the CFPB,” the lawsuit claims. “The President’s purported or intended appointment of defendant Mulvaney as acting director of the CFPB is unlawful.”
English said in a statement: “The talented and hard-working CFPB staff stand up for consumers every day. As Acting Director, I am filing this lawsuit to stand up for the CFPB.”
White House press secretary Sarah Huckabee Sanders responded with a jab at Cordray, who’s expected to run for governor of Ohio. “It is unfortunate that Mr. Cordray decided to put his political ambition above the interests of consumers with this stunt,” Sanders said. “Director Mulvaney will bring a more serious and professional approach to running the CFPB.”
Dodd-Frank says that the CFPB’s deputy director “shall serve as acting Director in the absence or unavailability of the director.” The Federal Vacancies Reform Act says that it only applies to agencies that lack a provision that “designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” An earlier version of Dodd-Frank said the Federal Vacancies Reform Act applied to the CFPB, but that language was stripped out of the final legislation, indicating Congress purposely outlined a different succession process. Several anti-Trump legal scholars say the law is on English’s side:
But the White House says it’s simply following the reasoning of the Justice Department’s Office of Legal Counsel, which issued an eight-page opinion on Saturday supporting Mulvaney’s appointment. It also shared a letter from Mary McLeod, CFPB’s general counsel, that tells the agency’s senior leadership that Trump has the right to name an interim director. “I advise all Bureau personnel to act consistently with the understanding that Director Mulvaney is the Acting Director of the CFPB,” McLeod said.
Congressional reaction has fallen along partisan lines. Sunday on CNN’s State of the Union, Republican senator Lindsey Graham said he supports Mulvaney’s appointment and called the CFPB the “most out-of-control, unaccountable federal agency” in D.C. On the same program, Democratic senator Dick Durbin said Dodd-Frank is clear, and English should run the agency. “Remember, this was the agency that fined Wells Fargo $100 million for defrauding the people who were creating phony accounts,” he said. “It’s a watchdog agency. Wall Street hates it like the devil hates holy water.”
But even if English prevails in court, it’s likely the victory will be short-lived. Trump is expected to appoint a permanent director in a matter of weeks, and it seems likely that Senate Republicans will confirm whoever he picks (even, perhaps, an unqualified ghost hunter). One way or another, it seems Trump is going to be gutting the CFPB.