What’s going on at the CFPB?
Over the holiday weekend, a scramble over who’s in charge of the Consumer Financial Protection Bureau has been unfolding.
Richard Cordray, the director of the CFPB, a consumer watchdog agency, resigned Friday and named his chief of staff, Leandra English, as deputy director, essentially establishing her as the bureau’s acting director. But shortly after, President Trump named Mick Mulvaney as CFPB’s acting director.
The two conflicting appointments sparked confusion over who will be in charge when employees return to work Monday.
What is the CFPB? What do they do?
The Consumer Financial Protection Bureau is tasked with overseeing financial institutions, monitoring markets and protecting consumers from financial fraud.
Inspired by Sen. Elizabeth Warren, the CFPB was created by the 2010 Dodd-Frank Wall Street reform law as a way to safeguard Americans from predatory lending that hurt many before the 2008 financial meltdown.
Created during the Obama administration, the CFPB has since established itself as a powerful regulator, taking on institutions like big banks and payday lenders. The Wells Fargo scandal involving phony accounts helped burnish the CFPB’s watchdog brand. While the CFPB didn’t uncover the trouble at Wells Fargo, the agency’s $100 million fine packed a punch and sent a message to banks.
Who is in charge?
That’s the big question right now.
Cordray was CFPB’s first chief, having served since his 2012 appointment by Obama. His resignation last week was welcome news for Republicans, who have long loathed Cordray. But his departure may have more to do with his personal political aspirations than GOP pressure. Cordray is widely thought to be preparing a 2018 run for governor of Ohio.
In his resignation letter to staff, Cordray announced that English will serve as the bureau’s acting director.
But shortly after Cordray’s announcement, Trump named Mulvaney, who is the Office of Management and Budget director,as the CFPB’s interim director.
These back-to-back moves set the question of who is in charge of the agency.
What’s happening now?
Both sides are citing different rules to make their claims for the interim director’s role.
Lawyers for English filed a lawsuit Sunday in the US District Court for the District of Columbia seeking to halt Mulvaney’s appointment. In their court filing, her attorneys argue English is entitled to the position under the Dodd-Frank Wall Street reform law that says the deputy director becomes acting director when the agency’s top spot is vacant.
“The President’s attempt to install a White House official at the head of independent agency — while allowing that officer to simultaneously serve in the White House — is unprecedented,” said English’s lawyer, Deepak Gupta, of the law firm Gupta Wessler, in the statement on Sunday. “The law is clear: Ms. English is acting director of the Consumer Financial Protection Bureau until the Senate confirms a new director.”
The White House acknowledged that it was aware of English’s lawsuit Sunday, but also maintained that the law is on its side.
“Director Mulvaney is the Acting Director of the CFPB,” said White House press secretary Sarah Sanders in a statement. “Now that the CFPB’s own General Counsel — who was hired under Richard Cordray — has notified the Bureau’s leadership that she agrees with the Administration’s and DOJ’s reading of the law, there should be no question that Director Mulvaney is the Acting Director.”
It’s unclear yet how the lawsuit will impact the situation.
Who’s for and against the CFPB?
Given that the agency was formed during the Obama administration, the CFPB has broad support from Democrats, especially from Warren, who brought up the idea in a paper she wrote when she was a law professor at Harvard.
She weighed in on Twitter, touting CFPB’s achievements as having returned “$12 billion to working families who were cheated. That’s government that works for the people.”
CFPB’s supporters say the agency plays a key role in preventing big business from preying on the little guy.
But critics, including Wall Street and most Republicans, say the CFPB is the epitome of government overreach and wields too much power. The Consumer Bankers Association, a trade group that represents retail banks, said in a statement Saturday that “the CFPB’s current governing structure is a dictatorship, period.”
Republican Sen. Tom Cotton blasted the CFPB as a “rogue, unconstitutional agency.”
“Leandra English’s lawsuit to install herself as acting director against the president’s explicit direction is just the latest lawless action by the CFPB. She doesn’t have a legal leg to stand on,” he said in a statement. He said English and anyone who “disobeys Director Mulvaney’s orders should also be fired summarily.”
Mulvaney has also been a major critic of the CFPB. While serving in Congress, he voted in favor of killing the agency and has argued that it places unduly harsh regulations. Critics see Cordray’s resignation as chance to remake the CFPB.
What happens next?
Mulvaney and his team are not expecting a showdown at the agency Monday morning, a source close to the Office of Management and Budget director told CNN. They view Mulvaney’s appointment as something that the Justice Department, consumer agency lawyers and staff agree upon and expect a normal transition, the source said.
Moreover, Trump has the authority to nominate a permanent leader for the CFPB. That nominee will need to be confirmed by the Senate — where he or she will undoubtedly face Warren.