Updated Nov. 28, 2017
The drama over who will lead the Consumer Financial Protection Bureau continued this week as two people battle over who will be the official acting director: one tapped by the agency’s former head, and the other appointed by President Donald Trump.
Richard Cordray, the former director of the CFPB, named Leandra English as his successor hours before he resigned on Nov. 24. On the same day, President Trump appointed Mick Mulvaney, currently the head of the Office of Management and Budget, as the agency’s interim director.
Two days after her appointment by Cordray, English filed a lawsuit against President Trump and Mulvaney seeking to block Mulvaney’s appointment.
Despite the controversy, Mulvaney reportedly showed up for work at the CFPB on Monday, carrying a bag of doughnuts. A former South Carolina representative, Mulvaney had said in a 2014 interview with the Credit Union Times that the CFPB was “a joke…in a sick, sad kind of way.” In 2015, he co-sponsored a legislation to eliminate the agency.
— Domenico Montanaro (@DomenicoNPR) November 27, 2017
“He wants me to get it back to the point where it can protect people without trampling on capitalism,” Mulvaney said at a press briefing on Monday.
Freshly appointed by Trump, Mulvaney announced a 30-day hiring freeze at the CFPB and an immediate halt on any new regulations, rules and guidances.
English wasn’t at the bureau on Monday, but had identified herself as the acting director in an email to CFPB staff. “It is an honor to work with all of you,” she wrote in the email.
CFPB employee showed me this email sent 30 min ago and signed by Leandra English, Acting Director. ?? pic.twitter.com/j7eiL5sxxJ
— Katie Rogers (@katierogers) November 27, 2017
Meanwhile, Reuters reported that Mulvaney had instructed CFPB employees to disregard instructions from English “in her presumed capacity as Acting Director.”
Bloomberg reports that Washington U.S. District Court Judge Timothy Kelly, a Trump nominee who has been on the bench since September, was assigned to rule on the case. A hearing was scheduled for 4:30 p.m. on Monday. Update: Kelly ruled against English on Tuesday evening. While the ruling cannot be challenged, Politico reported that English’s lawyer, Deepak Gupta, said they would be discussing next steps, saying, “This judge does not have the final word on what happens in this controversy, and I think he understands that.”
In their complaint, English’s attorneys claim that under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 2010 financial reform legislation that created the CFPB, the CFPB’s existing deputy director will take over the acting director role in the absence of the director.
The lawyers argued that Dodd-Frank’s provision on succession supersedes the Federal Vacancies Reform Act of 1988, which allows the president to name an acting official if the existing official resigns.
“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 complaint reads. “The President’s purported or intended appointment is also unlawful as a violation of the foundational principles of agency independence that Congress codified by the Dodd-Frank Act.”
What’s at stake
As Pres. Trump's choice for CFPB, Mulvaney has put a 30-day hiring freeze at Consumer Bureau and an immediate halt on any new regulations, rules, and guidance. https://t.co/3nyqsQmuQv pic.twitter.com/TOvWo8D9as
— CBS News (@CBSNews) November 27, 2017
The CFPB is a U.S. government agency responsible for consumer protection in the financial sector, established in the wake of the 2008 financial crisis.
The agency has aggressively targeted bad actors in the financial industry since its creation, reclaiming $11.9 billion for more than 29 million consumers. Its latest high profile actions included the Wells Fargo unauthorized accounts scandal and creating new rules around payday lending.
The Trump administration and Republicans have long sought to curtail the CFPB’s power as part of a broader effort to weaken federal regulation over financial institutions.
In late October, Senate Republicans killed an arbitration rule that the consumer watchdog wrote and would have made it easier for Americans to file class action lawsuits against big financial institutions.
Cordray was the agency’s first director, holding the office from 2013 until he announced he was cutting his tenure eight months short on Friday. He had been criticized by Washington conservatives and well-received by consumer advocates.
Before taking on the role of the bureau’s acting director, English served as the agency’s chief of staff. She has held positions at the CFPB, the Office of Management and Budget and the Office of Personnel Management, according to the CFPB statement.
“In considering how to ensure an orderly succession for this independent agency, I have also come to recognize that appointing the current chief of staff to the deputy director position would minimize operational disruption and provide for a smooth transition given her operational expertise,” Cordray said in a statement.
White House Press Secretary Sarah Sanders told reporters at a Monday press briefing that the administration has nothing against English, that she is still CFPB’s deputy director and has a legal standing in that capacity, “but not as the director.”
“We believe that Director Mulvaney is the right person at this time to lead [the CFPB] and that’s why he’s over there,” Sanders said.
Sen. Tom Cotton (R-Ark.) on Monday deemed the CFPB “a rogue, unconstitutional agency,” and that English “doesn’t have a legal leg to stand on” in her lawsuit.
“Leandra English’s lawsuit to install herself as acting director against the president’s explicit direction is just the latest lawless action by the CFPB,” Cotton said in a statement. “The president should fire her immediately and anyone who disobeys Director Mulvaney’s orders should also be fired summarily. The Constitution and the law must prevail against the supposed resistance.”
The National Consumer Law Center, a nonprofit organization dedicated to helping low-income and other disadvantaged people, said on Monday that Trump’s appointment of Mulvaney is “illegal.”
“In an attempt to install a wrecking ball at the helm of the consumer watchdog, President Trump has ignored the law that dictates that the consumer bureau’s deputy director takes over until Congress can confirm a new director,” the National Consumer Law Center statement reads.
“We should not forget that just 10 years ago, a focus on bank profits over consumer protection rules resulted in the worst financial collapse since the Great Depression, and many families have not yet recovered,” it continues. “It’s illegal and reckless to put someone who thinks that consumer protection is a joke in charge of our key financial watchdog.”