Retiring director, President Donald Trump both appoint successors
WASHINGTON — President Donald Trump and the outgoing head of the Consumer Financial Protection Bureau have both nominated acting directors to head the watchdog agency, throwing its leadership into disarray. Legal analysts were split over whether the White House or the bureau had authority to name an acting director, with each side citing the fine print of dueling federal rules.
Trump proposed his White House budget director, Mick Mulvaney, as the acting director of the agency, which Mulvaney once called a “joke” and said he wished didn’t exist. Several defenders of the agency said they were worried that Mulvaney, if given the helm on a temporary basis, would gut its powers.
The series of events began Friday (Nov. 24) when long-time Director Richard Cordray announced that he would leave at the end of the day, instead of at the end of the month. He promoted his chief of staff, Leandra English, to become deputy director and said in a letter to staff that English would serve as the agency’s acting director until a replacement was confirmed by the Senate.
“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. The move was widely seen by analysts as an attempt to block Trump from immediately putting a Republican in charge of the agency without Senate confirmation.
But a few hours later, the White House announced that Mulvaney, the director of the Office of Management and Budget, would take over. “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,” a White House statement said.
Mulvaney is also expected to remain head of the Office of Management and Budget until a permanent consumer agency director is nominated and confirmed by the Senate, according to the White House.
The Dodd Frank regulatory reform bill, passed in 2010, states that a deputy director will “serve as acting director in the absence or unavailability of the director.” But legal experts said that the word “unavailability” could be open to various interpretations. For instance, that phrase could be interpreted to be about the director’s health, rather than retirement.
“The courts will likely have to resolve which interpretation is accurate,” said Mike Calhoun, president of the Center for Responsible Lending.
Others argued that the Federal Vacancies Reform Act gives the president wide latitude to appoint an acting director. “President Trump is the only person allowed to name the new head of the Consumer Financial Protection Bureau. Any attempt to circumvent that authority by Cordray runs counter to the fundamental principles of American governance,” said Rick Manning, president of the Americans for Limited Government.
Regardless, Cordray’s resignation gives Republicans an opportunity to remake an agency they have long complained is too powerful, whether under a temporary or permanent director.
Mulvaney has been one of the agency’s toughest critics. When he was a Republican congressman in 2015, he co-sponsored legislation to get rid of the agency and said at a House hearing: “I don’t like the fact that CFPB exists, I’ll be perfectly honest you.”
In a 2014 video interview with the Credit Union Times, Mulvaney complained that it could be difficult even to have the agency return a phone call. “It has been a truly adversarial relationship. The CFPB, by virtue of the fact that they don’t need Congress to exist,” is difficult to hold accountable, he said. “The place is a wonderful example of how a bureaucracy will function if it has no accountability to anybody.” The agency is a “joke… in a sick, sad way,” he said.
But supporters of the agency say it is one of the central achievements of President Barack Obama’s administration after the 2008 financial crisis. Created under the 2010 financial reform bill known as Dodd-Frank, it regulates the way that banks and other financial companies interact with consumers, policing payday loans and mortgages, among other things. The agency has extracted billions in fines from big banks, including $100 million from Wells Fargo last year for opening millions of sham accounts that customers didn’t ask for.
“In its short years as the nation’s top consumer cop, all under Director Cordray, the young bureau has returned $12 billion dollars to over 29 million consumer victims of financial schemes by wrongdoers ranging from Wall Street banks, mortgage companies and for-profit schools to debt collectors, credit bureaus and payday lenders,” said Ed Mierzwinski, director of the consumer program at U. S. Public Interest Research Group.
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Story by Renae Merle.
