On Black Friday, the Consumer Financial Protection Bureau was left in the dark about its leadership.
Director Richard Cordray announced early in the day that he would resign his position, effective at midnight, and named his chief of staff, Leandra English, as the deputy director. That would ensure that English would take over as Cordray’s replacement.
Or would it?
Hours later, President Donald Trump announced that he officially named Office of Management and Budget Director Mick Mulvaney as the acting director, a move the president believes he can make under the Federal Vacancies Reform Act.
“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,” the White House said in a statement announcing the appointment. “Director Mulvaney will serve as acting director until a permanent director is nominated and confirmed.”
Meanwhile, the CFPB announced English’s appointment, as well as the end of David Silberman’s term as acting deputy director, allowing Silberman to return to his role in charge of the Research, Markets and Regulations division.
“Leandra is a seasoned professional who has spent her career of public service focused on promoting smooth and efficient operations,” Cordray said in a press release. “As deputy director, we will continue to benefit from Leandra’s in-depth knowledge of the operational needs of this agency and its staff. I would like to thank David Silberman for taking on the additional role of acting deputy director during a busy time and appreciate his continued service as associate director of Research, Markets, and Regulations.”
English has been with the CFPB since its opening, having served as deputy chief operating officer, acting chief of staff, and deputy chief of staff. In addition to her work at the CFPB, English served as the principal deputy chief of staff at the Office of Personnel Management, chief of staff and senior advisor to the deputy director for management at OMB, and as a member of the CFPB implementation team at the Department of the Treasury.
Mulvaney struck a sharp contrast to the career bureau employee whom Cordray elevated, saying in a statement that he hoped to transition the CFPB to be “more effective in its mission.”
“First, I’d like to thank President Trump for his confidence and the support he has shown me. It continues to be my honor to serve as his director of the Office of Management and Budget (OMB). I will continue to work hard on behalf of the American people, this time wearing an additional hat as the acting director of the Consumer Financial Protection Bureau (CFPB),” Mulvaney said. “As in my role at OMB, the priority during this transition is to put the American people first. I believe Americans deserve a CFPB that seeks to protect them while ensuring free and fair markets for all consumers. Financial services are the engine of American democratic capitalism and we need to let it work.
“I look forward to working with the expert personnel within the agency to identify how the bureau can transition to be more effective in its mission, while becoming more accountable to the taxpayer.”
The dispute appears clear to be headed to the courts to resolve. Each action the CFPB undertakes – be it an enforcement action or rulemaking – needs to be approved by the director before it can be official. With seemingly two acting directors in charge, CFPB work could grind to a halt while the dispute is resolved.
Sides were staked out Friday on the rightful interpretation of leadership. Sen. Elizabeth Warren (D-Mass.), who oversaw the building of the bureau, said in a statement via Twitter that Cordray’s act was the correct interpretation.
“The Dodd-Frank Act is clear: If there is a CFPB director vacancy, the deputy director becomes acting director. President Trump can’t override that,” Warren stated. “President Trump 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.”
That view was backed up by the Americans for Financial Reform, which said in a statement via Twitter, “The statute creating the CFPB says that the agency’s deputy director serves as acting director until a new director has been nominated by the president and confirmed by the Senate. We look forward to working with Leandra English until someone new is confirmed.”
In a statement to Law.com, Credit Union National Association President and CEO Jim Nussle said the dispute was exactly the reason why the bureau needs a commission rather than a single director.
“Director Cordray’s final act illustrates so clearly why a commission overseeing CFPB would be superior to the single director model. With a commission in place there would be no opportunity for a lame duck appointee to select a non-Senate confirmed citizen to lead an agency with such an unaccountable structure governing the entire financial services marketplace,” Nussle said. “A CFPB commission would ensure that leadership at this agency — like so many others — continues without disruption.”
The issue could be decided by the courts before this gets to the court, though. The pending decision by the en banc court of the D.C. Circuit Court of Appeals could rule the structure of the bureau unconstitutional, allowing President Trump to immediately fire English. That ruling has been expected at any time.