Competing Laws Could Shape CFPB Director Appointment in 2021

A battle similar to the 2017 debate between the authority of the president or outgoing CFPB leader to appoint a new bureau director could resurface as Democrats select cabinet appointments next year.

11/9/2020 3:00 PM

CFPBNewsAdvocacy
Competing Laws Could Shape CFPB Director Appointment in 2021

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.

The last time there was a shift in leadership at the bureau—pre-Seila Law—the matter went to court. Former CFPB Director Richard Cordray resigned in November 2017 and Mick Mulvaney, at the time in charge of the Office of Management and Budget, was appointed by President Donald Trump as interim director.

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, ACA International previously reported.

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 Federal Vacancies Reform Act (FVRA).

Simple, right?

What is important to know now, considering the decision in Seila Law, is CFPB Director Kathy Kraninger will likely resign or be removed at-will by Joe Biden, who the media has called as the 46th president of the United States.

At that time, ACA is projecting that the Democrats will want to uphold the process in the Federal Vacancies Reform Act and allow the president to appoint a new acting director.

Of note is that this is the opposite of the Cordray/English/Mulvaney saga in 2017/18 when the Democrats argued against the president’s ability to appoint a new director and in favor of abiding by Dodd-Frank’s language that the deputy director would assume leadership of the bureau.

A House Financial Services Committee press release from 2017 notes, “[The] ranking member of the House Committee on Financial Services, and 25 current and former Democratic members filed an amicus brief today with the D.C. Circuit Court of Appeals, arguing that Consumer Financial Protection Bureau Deputy Director Leandra English should serve as acting director of the consumer bureau until a director is confirmed by the Senate.”

The amicus brief stated, “President Trump is entitled to choose who the next director of the bureau will be, but he must nominate that person, and the Senate must agree to confirm him or her. Until that happens, Dodd-Frank makes clear who should be running the bureau: its deputy director.”

If that were the case, Tom Pahl would be the director until the president selects a replacement and the Senate confirms his choice.

The Federal Vacancies Reform Act also requires that the president’s appointee must be someone already confirmed by the Senate, such as Rohit Chopra, at the Federal Trade Commission.

As outlined in a blog post from U.S. Sen. Roy Blunt, R-Mo., “The FVRA limits the tenure of acting officials in two ways: who can be an acting official; and how long they can serve. It provides a default rule that the first assistant to a position automatically becomes the acting officer upon a vacancy. The president can override this default rule if he directs that another person confirmed by the Senate or another senior official in the same agency as the vacancy should serve instead.”

The blog also notes that the FVRA imposes two possible time limits on acting officials. The acting official may serve:

  • For 210 days starting when the vacancy occurs, or
  • While there is a first or second nomination for the office pending in the Senate.

This process will not only impact the selection for the new director of the CFPB, but other cabinet positions like the U.S. Department of Education.

The remaining election results for the U.S. Senate, where the majority hinges on two runoff elections in Georgia Jan. 5, will influence those cabinet decisions as well.

If the Democrats take the majority in the Senate, there will be a new majority leader to replace Mitch McConnell, R-Ky., and arguably more flexibility in choosing who will take the helm at the CFPB. If the Republicans keep the majority in the Senate, McConnell’s continued role as majority leader could be helpful in ensuring that the president chooses a more moderate CFPB replacement who could be approved by the Senate.

ACA is prepared for all outcomes as we continue to await the final election results.

CFPB Debt Collection Rule

Part one of the CFPB’s debt collection rule released Oct. 30 and part two—slated for release in December—would both likely be potentially subject to a challenge under the Congressional Review Act (CRA).

However, the final results of the election could also influence any CRA challenges of the rule. As it stands now, consumer groups and members of Congress don’t appear to want to throw out the entire rulemaking, which is what would happen under the CRA.

“If there are any changes, they’re much more likely to happen through the regulatory process, particularly since the Democrats will be in charge of the CFPB in 2021,” said ACA’s Vice President and Senior Counsel of Federal Advocacy Leah Dempsey.

In the House, Republicans flipped 10 seats, narrowing the Democrats’ majority.

There are still several outstanding races that will ultimately determine how thin the majority is in the House. The outcome will be an important factor in the ability for Republicans to successfully negotiate with moderate or “Blue Dog” Democrats on key pieces of legislation.

Read more on uncalled elections in the House and Senate in coverage from ACA here.

ACA members are encouraged to register for the remaining webinars in the ACA Huddle CFPB Rule Series, which will focus on components of the debt collection rule but may provide advocacy and congressional updates as needed. Recordings and slide presentations from past webinars are also available for members on the series website.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Competing Laws Could Shape CFPB Director Appointment in 2021

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.

The last time there was a shift in leadership at the bureau—pre-Seila Law—the matter went to court. Former CFPB Director Richard Cordray resigned in November 2017 and Mick Mulvaney, at the time in charge of the Office of Management and Budget, was appointed by President Donald Trump as interim director.

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, ACA International previously reported.

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 Federal Vacancies Reform Act (FVRA).

Simple, right?

What is important to know now, considering the decision in Seila Law, is CFPB Director Kathy Kraninger will likely resign or be removed at-will by Joe Biden, who the media has called as the 46th president of the United States.

At that time, ACA is projecting that the Democrats will want to uphold the process in the Federal Vacancies Reform Act and allow the president to appoint a new acting director.

Of note is that this is the opposite of the Cordray/English/Mulvaney saga in 2017/18 when the Democrats argued against the president’s ability to appoint a new director and in favor of abiding by Dodd-Frank’s language that the deputy director would assume leadership of the bureau.

A House Financial Services Committee press release from 2017 notes, “[The] ranking member of the House Committee on Financial Services, and 25 current and former Democratic members filed an amicus brief today with the D.C. Circuit Court of Appeals, arguing that Consumer Financial Protection Bureau Deputy Director Leandra English should serve as acting director of the consumer bureau until a director is confirmed by the Senate.”

The amicus brief stated, “President Trump is entitled to choose who the next director of the bureau will be, but he must nominate that person, and the Senate must agree to confirm him or her. Until that happens, Dodd-Frank makes clear who should be running the bureau: its deputy director.”

If that were the case, Tom Pahl would be the director until the president selects a replacement and the Senate confirms his choice.

The Federal Vacancies Reform Act also requires that the president’s appointee must be someone already confirmed by the Senate, such as Rohit Chopra, at the Federal Trade Commission.

As outlined in a blog post from U.S. Sen. Roy Blunt, R-Mo., “The FVRA limits the tenure of acting officials in two ways: who can be an acting official; and how long they can serve. It provides a default rule that the first assistant to a position automatically becomes the acting officer upon a vacancy. The president can override this default rule if he directs that another person confirmed by the Senate or another senior official in the same agency as the vacancy should serve instead.”

The blog also notes that the FVRA imposes two possible time limits on acting officials. The acting official may serve:

  • For 210 days starting when the vacancy occurs, or
  • While there is a first or second nomination for the office pending in the Senate.

This process will not only impact the selection for the new director of the CFPB, but other cabinet positions like the U.S. Department of Education.

The remaining election results for the U.S. Senate, where the majority hinges on two runoff elections in Georgia Jan. 5, will influence those cabinet decisions as well.

If the Democrats take the majority in the Senate, there will be a new majority leader to replace Mitch McConnell, R-Ky., and arguably more flexibility in choosing who will take the helm at the CFPB. If the Republicans keep the majority in the Senate, McConnell’s continued role as majority leader could be helpful in ensuring that the president chooses a more moderate CFPB replacement who could be approved by the Senate.

ACA is prepared for all outcomes as we continue to await the final election results.

CFPB Debt Collection Rule

Part one of the CFPB’s debt collection rule released Oct. 30 and part two—slated for release in December—would both likely be potentially subject to a challenge under the Congressional Review Act (CRA).

However, the final results of the election could also influence any CRA challenges of the rule. As it stands now, consumer groups and members of Congress don’t appear to want to throw out the entire rulemaking, which is what would happen under the CRA.

“If there are any changes, they’re much more likely to happen through the regulatory process, particularly since the Democrats will be in charge of the CFPB in 2021,” said ACA’s Vice President and Senior Counsel of Federal Advocacy Leah Dempsey.

In the House, Republicans flipped 10 seats, narrowing the Democrats’ majority.

There are still several outstanding races that will ultimately determine how thin the majority is in the House. The outcome will be an important factor in the ability for Republicans to successfully negotiate with moderate or “Blue Dog” Democrats on key pieces of legislation.

Read more on uncalled elections in the House and Senate in coverage from ACA here.

ACA members are encouraged to register for the remaining webinars in the ACA Huddle CFPB Rule Series, which will focus on components of the debt collection rule but may provide advocacy and congressional updates as needed. Recordings and slide presentations from past webinars are also available for members on the series website.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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