Richard Cordray, director of the Consumer Financial Protection Bureau, stepped down Nov. 24. While President Trump has the right to name Cordray’s permanent replacement, an argument broke out over who would be the bureau’s interim director.
The same day he resigned, Cordray named former Chief of Staff Leandra English as deputy director of the agency, thus positioning her to serve as the bureau’s acting director. A few hours after English’s promotion, however, Pres. Trump appointed Office of Management and Budget Director Mick Mulvaney as the CFPB’s interim director. Like many Republicans, Mulvaney is an outspoken critic of the CFPB and, as a congressman, he voted to dismantle the agency.
“The law is clear here. It says that the director, that was me on Friday, shall appoint a deputy director. I did that,” Cordray said on MSNBC’s “The Rachel Maddow Show.” Should there be a deputy director when the director resigns, the deputy director becomes acting head, Cordray said, citing the 2010 Dodd-Frank Act.
White House and Justice Department officials disagreed, pointing to the Federal Vacancies Reform Act as a justification of President Trump’s authority to appoint Mulvaney.
English filed a lawsuit against Trump and Mulvaney to block Mulvaney’s appointment. “The President’s purported or intended appointment of defendant Mulvaney as acting director of the CFPB is unlawful,” it said.
“The talented and hard-working CFPB staff stand up for consumers every day. As acting director, I am filing this lawsuit to stand up for the CFPB,” English said in a statement.
Mulvaney fired back with an email telling CFPB staff, “Please disregard any instructions you receive from Ms. English in her presumed capacity as acting director,” according to Reuters. He also announced a 30-day hiring and regulatory freeze on Nov. 27.
U.S. District Judge Timothy Kelly — a Trump appointee — sided with the President and Mulvaney on Nov. 28 after both sides presented their arguments during an emergency hearing on Monday.
Cordray’s departure marks an opportunity for Trump to shape the CFPB, and some in the financial services industry suggested it is an ideal time to rework the bureau’s structure.
“We will also continue to support structural changes that would increase accountability at the bureau, including a five-member, bipartisan commission,” said Rob Nichols, president and CEO of the American Bankers Association. “This would provide continuity across administrations and broaden the CFPB’s perspective on regulation that must carefully balance consumer protection against access to credit.”
Shortly after leaving the CFPB, Cordray announced he is running for governor in his home state of Ohio.
About two weeks later, 17 state attorneys general — including those from Iowa and Minnesota — sent a letter to President Trump, demanding he replace Mulvaney as CFPB interim director.
The letter said past statements from Mulvaney, including a characterization of the bureau as “a joke” and “an awful example of a bureaucracy that has gone wrong,” disqualify him from leading it.
“Such statements about an agency that has helped millions of American consumers and achieved fundamental reform in a number of critically important areas of American commerce are categorically false, and should disqualify Mr. Mulvaney from leading the agency, even on an acting basis,” the letter stated. “As the top state law enforcement officials charged with investigating consumer complaints of fraudulent, deceptive and abusive financial practices in our respective states, we know from first-hand experience that the need for strong consumer financial protection is undiminished in the years since the financial crisis.”
The attorneys general did not specifically demand English get the job. Moreover, a group of Republican attorneys general wrote a letter advocating for Mulvaney. In the meantime, English followed up with additional legal moves to obtain the interim director’s post.