Saturday, November 25, 2017

Major fight looms over who will lead the Consumer Financial Protection Bureau

My theory of the Trump administration can be expressed as a simple formula: X-antiX. As I said back in January, “For a given agency X, pick as its leader someone who is fiercely antiX. Then sit back and watch the carnage.” I then used EPA as a case study, but the formula applies to almost every cabinet pick. The most recent example, as of this morning, is the brewing legal clash over who will head the Consumer Financial Protection Bureau (CFPB).

The NY Times reports that Dueling Appointments Lead to Clash at Consumer Protection Bureau.

The bureaucratic standoff began Friday afternoon when Richard Cordray, the Obama-appointed leader of the bureau, abruptly announced he would leave the job at the close of business, a week earlier than anticipated. He followed up with a letter naming his chief of staff, Leandra English, as the agency’s deputy director.

The announcement came with a twist. Under the law, he said, that appointment would make the new deputy director the agency’s acting director. …

In a letter to the consumer protection agency’s staff, Mr. Cordray named Ms. English as deputy director. Under the 2010 Dodd-Frank Act, which established the regulatory agency, the deputy director is to serve as acting director in the absence of a permanent leader, Mr. Cordray said.

On Friday, [Senator Elizabeth] Warren defended Mr. Cordray’s decision on Facebook: “President Trump can’t override that. He can nominate the next CFPB Director — but until that nominee is confirmed by the Senate, Leandra English is the Acting Director under the Dodd-Frank Act.”

Predictably, the denizens in the White House felt no obligation to even talk about the legality of what they would do next.

The White House retaliated, saying that the budget director, Mick Mulvaney, who once characterized the consumer protection bureau as a “sad, sick joke,” would be running the agency. He would also keep his current job as head of the Office of Management and Budget.

Mulvaney, you see, is a rabid enemy of all things, anything, that would restrain large financial institutions.

The appointment of Mr. Mulvaney, who as a Republican congressman from South Carolina was a co-sponsor of legislation to shut down the consumer bureau, had been widely anticipated. The White House said in a statement on Friday that President Trump looked forward to seeing Mr. Mulvaney take a “common sense approach” to leading the bureau’s staff.

You see? It’s an example of X-antiX.

… Lisa Donner, executive director of Americans for Financial Reform, said in a statement. “Mulvaney has said he is opposed to the very existence of the C.F.P.B., and as a member of Congress he voted in favor of Wall Street banks and predatory lenders — his largest donors — again and again.”

The Washington Post also reports on the looming legal fight in The CFPB now has two acting directors. And nobody knows which one should lead the federal agency.

Legal analysts were split over whether the White House or the CFPB had authority to name an acting director, with each side citing the fine print of dueling federal rules. Some added that the laws were open to interpretation and that the courts ultimately would have to decide the matter.

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 the director’s retirement.

Politico adds more on the legal fight in Trump taps Mulvaney to head CFPB, sparking confusion over agency’s leadership.

The 2010 Dodd-Frank Act, which created the CFPB, explicitly says the consumer bureau’s deputy director shall “serve as acting Director in the absence or unavailability of the Director,” giving the edge to English.

Yet the Federal Vacancies Act allows the president to install a temporary acting head of any executive agency who has already been confirmed by the Senate to another position, like Mulvaney has as leader of the Office of Management and Budget.

Still, the Vacancies Act says that an opening may also be filled if another law “expressly … designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.”

It doesn’t say whether one approach supersedes the other, something the courts will likely have to sort out.

In naming the Deputy Director Cordray cited the specific statute.

“Upon my departure, [English] will become the acting Director pursuant to section 1011(b)(5) of the Dodd-Frank Act,” Cordray said in a note to staff.

And, as an ex-colleague would have said, that got the financial industry’s undies in a bunch.

Financial companies, which have long criticized Cordray as overly aggressive, decried the move.

“Today’s actions by former CFPB Director Richard Cordray in appointing his own Acting Director to lead the bureau reinforces the problematic nature of having a single and completely unaccountable leader,” said Chris Stinebert, head of the American Financial Services Association, which represents installment lenders, in a statement.

The decision to choose who should lead the country’s consumer protection agency, and confusion that’s been caused by Cordray’s own ‘succession plan,’ should not be made by one individual and for this reason AFSA has long advocated the need for a bipartisan commission,” he added.

Unless, that is, the “one individual” is Donald Trump.

You want to know why CFPB is so hated by conservatives? Here’s just one example from the Post’s report: “The CFPB 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 the absence of policing by the CFPB, those abuses would continue unchecked. Stay tuned.

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