The battle over who will lead the Consumer Financial Protection Bureau culminated this week in a federal court face-off.
On Nov. 26, Leandra English, who was named deputy director of the watchdog agency last week by outgoing CFPB Director Richard Cordray, filed a lawsuit over the weekend seeking to block President Trump from naming his own appointee to lead the agency on an interim basis. In her nine-page complaint, English argued that she officially became acting director of the CFPB, following Cordray’s departure, as mandated under the Dodd-Frank Act. That law states that the CFPB’s deputy director “shall…serve as the acting director in the absence or unavailability of the director.”
By statute, English “serves in that capacity until such time as the President appoints and the Senate confirms a new Director,” the complaint states. The lawsuit aims to block President Trump’s appointment, made on Nov. 24, of Mick Mulvaney, Director of the Office of Management and Budget, to serve as the CFPB’s acting director until a new appointee is named and confirmed by the Senate.
At present, both English and Mulvaney are acting as the heads of the CFPB, with the presence of each countermanding the authority of the other.
“The President’s attempt to install a White House official at the head of an independent agency, while allowing that official to simultaneously serve in the White House, is unprecedented,” English’s lawyer, Deepak Gupta of the law firm Gupta Wessler, said in a statement. “The law is clear: Leandra English is acting director of the Consumer Financial Protection Bureau until the Senate confirms a new director.”
A legal memo from the Department of Justice’s Office of Legal Counsel argued that the Federal Vacancies Reform Act of 1998 gives President Trump the power to name an acting director. That law applies when “an officer of an Executive agency…whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate, dies, resigns, or is otherwise unable to perform the functions and duties of the office.”
The action against President Trump and Mulvaney seeks a temporary restraining order on an emergency basis and a declaration, recognizing English as the acting director of the CFPB.
As Cordray is the only person to have ever headed the CFPB, this face-off between English and Mulvaney marks the first battle for succession of a new director.
The Consumer Bankers Association, which represents America’s retail banks above $10 billion in assets, argued the succession battle shows that the CFPB lacks proper Congressional oversight: “The CFPB’s current governing structure is a dictatorship, period,” CBA President & CEO Richard Hunt said in a statement, following Cordray’s resignation. “It is not a sensible nor sustainable approach to leadership.”
“Conflicting attempts to name a successor at the CFPB creates further chaos for consumers and the banking industry,” Hunt added. “The leaders of our country should act to ensure one individual, the Director of the CFPB, does not possess unprecedented power over all consumer financial products and financial institutions. It is well past time for the Administration and Congress to provide a balanced, responsible and transparent approach to consumer protection and establish a Senate-confirmed, bipartisan commission at the CFPB.”
Whichever side prevails in this struggle, one thing remains clear: compliance officers whose work is impacted by the direction of the CFPB need to watch this closely, as the outcome may not be gained easily, quickly, or cleanly.