Justice Dept., AGs, protest ‘bureaucratic sleight-of-hand’ in CFPB battle

The legal battle over leadership of the Consumer Financial Protection Bureau remains far from resolved.

On Nov. 26, Leandra English, was named deputy director by outgoing CFPB Director Richard Cordray. In doing so, he sought to secure her continued leadership upon his resignation and plans to run for governor in Ohio. President Trump, however, made his own interim appointment, relying upon the Federal Vacancies Re-form Act: Mick Mulvaney, director of the Office of Management and Budget.

On Nov. 28, Judge Timothy Kelly of the District Court of the District of Columbia denied a request for a restraining order that would have prevented Mulvaney from becoming the interim chief, siding with the Trump administration.

The matter, however, is far from settled and could eventually wind its way to the Supreme Court. On Dec, 18 a coalition of Republican attorneys general jumped into the fray.

Representatives of Texas, West Virginia, Alabama, Arizona, Arkansas, Florida, Georgia, Kansas, Louisiana, Michigan, Nebraska, Oklahoma, and South Carolina weighed in on the matte with a “friend of the court” brief.

“The CFPB wields sweeping power over the actions of millions of Americans,” they wrote. “As a panel of the D.C. Circuit recently observed, ‘the Director of the CFPB possesses more unilateral authority—that is, authority to take action on one’s own, subject to no check—than any single commissioner or board member in any other independent agency in the U.S. Government.’”

“Any federal official who wields that level of power should be selected by the President—not by an unaccountable federal bureaucrat,” they added. “The President’s choice for Acting Director pursuant to the Federal Vacancies Reform Act must be honored.”

According to plaintiffs, the Dodd-Frank Act, which created the CFPB, overrides the Federal Vacancies Reform Act and gives the President no say in that decision.

The Department of Justice is also defending the administration’s appointment with its own brief.

“Over the two years preceding his resignation, then-Director Cordray ran the CFPB without appointing a deputy director,’ the brief says. “Yet in the waning hours of his last day in office, then-Director Cordray reassigned the plaintiff—a CFPB employee then serving as his chief of staff—to serve as the Bureau’s Deputy Director. He made no secret of the fact that this action was an attempt to hand-select his successor.”

“That bureaucratic sleight-of-hand failed,” the brief says, regarding the President’s appointment. “There is no question that a preliminary injunction would impose substantial harms on the execution of the nation’s consumer financial protection laws. An order compelling the President to recognize the plaintiff as acting director and to withdraw his designation of Mr. Mulvaney would be an extraordinary intrusion into core Executive Branch operations; it would sow confusion in the face of the consensus view that Mr. Mulvaney should be recognized as the Acting Director; it would disrupt the agency’s operations; and it would lend credence to the view that the leadership of the CFPB is accountable to no one—not even the President.”