The fight over who will lead the Consumer Financial Protection Bureau for an interim term intensified over the weekend as former Director Richard Cordray named the agency’s chief of staff as his temporary successor, while President Donald Trump continues to insist he has the authority to name a director.
The president’s pick — Director of the Office of Management and Budget Mick Mulvaney — showed up at the office this morning with a bag of donuts for staffers and began reading through the CFPB’s transition briefing book. At the same time, Cordray’s pick — newly named Deputy Director Leandra English — sent an email to staffers identifying herself as “acting director,” according to The Washington Post.
On Saturday, The Justice Department’s Office of Legal Counsel issued an eight-page report claiming the president has the authority to appoint a temporary director under The Federal Vacancies Reform Act of 1998. CFPB General Counsel Mary McLeod has also issued a memo supporting those findings and is expected to release it today, according to Reuters.
Late Sunday, a lawsuit was filed in the U.S. District Court of D.C. claiming English is the “rightful acting director” of the CFPB, and asked for a temporary restraining order to prevent Trump from appointing Mulvaney.
Rulemaking procedures are largely expected to halt until the drama at the CFPB’s director’s office simmers down or a permanent replacement is confirmed by the Senate. Although English has largely served on the operational side of the CFPB and doesn’t have a history of policy, she is expected to continue the same tactics and enforcement seen under Cordray’s leadership.
Yet, Reuters reported that the bureau was expected to sue Santander Consumer USA today for overcharging consumers who bought guaranteed asset protection (GAP) policies. International Business Times also noted that Mulvany’s former chief of staff Natalee Binkholder now serves as a lobbyist for Santander. Binkholder served as his employee from 2011 to 2017.
Any action the CFPB takes under this fraught leadership structure could face legal challenges from companies being sued by the bureau, according to Bloomberg.
Both sides in this battle over the “rightful” director cite their own legal and congressional doctrine to justify their stance.
The Federal Vacancies Reform Act does give the president the authority to appoint an acting director who has already been confirmed by the Senate for another position, which makes Mulvaney eligible. However, it must be the “exclusive means” for installing a new director.
The Dodd-Frank Act does stipulate other means for enacting a director. Cordray and English point to the legislation, which states that the deputy director shall “serve as the director in the absence or unavailability of the [appointed] director.”
However, the Department of Justice found that there is another legal example to support the president’s authority to use the Federal Vacancies Reform Act, even when it’s not “the exclusive means.” In Hooks v.s Kitsap Tenant Support Services Inc., the court found that the president has the authority to choose between these two options. Yet, Barnie Frank, former Democratic representative of Massachusets and an author of the Dodd Frank Act, stated Monday that the Justice Department’s reading of the law was not the original intention.
The Justice Department “expresses no view” about the “validity” of English’s appointment as deputy director, but noted that Trump named Mulvaney as the acting director first.
“There is no way for this to get resolved short of court intervention,” Alan Kaplinsky, a lawyer at Ballard Spahr, told Bloomberg. “The CFPB will be paralyzed until we figure out who is in charge.”Like This Post