Former CFPB Deputy Director, Brian Johnson explores the options for leadership at the Consumer Financial Protection Bureau next year.
11/13/2020 9:00
As ACA International reported previously, the U.S. Supreme Court ruled this year in Seila Law v. Consumer Financial Protection Bureau that the president can remove the director of the bureau at will, but the exact way that will play out under a Democrat-controlled White House could lead to some contention in Washington.
Brian Johnson, a partner at Alston & Bird in Washington, D.C., and a contributor to the ACA Huddle webinar series on the CFPB’s final debt collection rule, provided more insight on the future of the bureau’s leadership in an article on the firm’s website, “Could Biden Appoint an Acting CFPB Director Under the FVRA? Not if He Fires Director Kraninger First.”
In the article, the firm’s financial services and products group reviews case law and academic research surrounding the implications of a president removing a department head confirmed by the U.S. Senate before the end of their term.
“Conventional wisdom holds that if former Vice President Joe Biden becomes president next year, he will remove current CFPB director Kathy Kraninger from office, even though her statutory term does not expire until December 2023,” Johnson reports. “The president would then be expected to name and seek Senate confirmation of a nominee to succeed her. But what would happen in the interim between Kraninger’s removal and the confirmation of her successor? Conventional wisdom again holds that President Biden would name an acting director to run the CFPB. However, it is far from clear that he would succeed in doing so.”
Johnson continues, “The president might attempt to use a recess appointment to fill the vacancy, but such an appointment must be made during a recess of the Senate, and the Senate could prevent him from doing so by simply remaining in session. If a recess appointment cannot be made, there are two statutory mechanisms provided by Congress for maintaining CFPB operations when there is no director. The first is found in Section 1011 of Dodd-Frank, which provides that in the ‘absence or unavailability’ of the director, the CFPB’s deputy director shall serve as acting director. The second is the Vacancies Act, as amended by the Federal Vacancies Reform Act of 1998 (FVRA), which provides an alternative means by which the president may appoint an eligible government employee to temporarily perform the nondelegable functions and duties of a vacant advice-and-consent position in an executive agency.”
The FVRA was at the center of the last change in bureau leadership when Director Richard Cordray resigned in November 2017 and ran for governor in Ohio.
Mick Mulvaney, at the time in charge of the Office of Management and Budget, was appointed by President Donald Trump as interim director under the FVRA, ACA previously reported.
However, before he left, Cordray promoted Leandra English from chief of staff at the bureau to deputy director, meaning—under the Dodd-Frank Act—she would step in as interim director.
English responded to the conflict with a lawsuit, English v. Trump, et. al, seeking a temporary restraining order against the Trump administration. Ultimately, a judge in the U.S. District Court for the District of Columbia ruled against English and Mulvaney took the role as acting director of the bureau under the president’s authority to make that decision as outlined in the FVRA, ACA previously reported.
Future Use of the FVRA
The critical distinction between the English situation and what could transpire next year is whether the CFPB director resigns or is fired. The FVRA clearly covers vacancies created by death or resignation, whereas research and observations on the law’s text, historical context and legislative history suggest that the law does not apply to vacancies created by removal, Johnson reports. The reason why, according to several notable sources cited by Johnson, is that Congress passed the FVRA to eliminate the threat to the Senate’s advice and consent power posed by permitting the president to create vacancies and then appoint acting officials at will.
“If this analysis is correct,” Johnson concludes, “it means that if Joe Biden removes Kraninger from office, he will lack statutory authority to appoint an acting director to run the CFPB. Instead, the deputy director of the CFPB will serve as the acting director pursuant to Section 1011 of Dodd-Frank.”
Read more in his report here.