Legal Challenge Emerges After Two Interim Leaders Assume Top Role at CFPB


11/27/2017 11:00:00 PM

Richard Corday officially resigned Nov. 24 and his deputy director is contesting President Donald Trump’s authority to appoint Mick Mulvaney.

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Mick Mulvaney, President Donald Trump’s choice for interim director of the CFPB, ordered the bureau’s employees “to ignore all directives from Deputy Director Leandra English and report them to the agency’s legal department,” according to reports from The Hill and Reuters.

Mulvaney also placed a 30-day moratorium on new regulations from the CFPB as well as a hiring freeze, The Los Angeles Times reports. “Anything in the pipeline stops for at least 30 days,” Mulvaney said, according to the article.

This is significant because Richard Cordray, the CFPB’s controversial former director, elevated English to the deputy director’s (interim leader) position before vacating his office Nov. 24. So, the question is, who has the authority to select the interim leader, Cordray or Trump?

The U.S. District Court for the District of Columbia could settle the issue as English filed a lawsuit  Nov. 26 contesting Trump’s appointment arguing that the Dodd-Frank Act places leadership at the bureau in the hands of the deputy director before a permanent director is appointed, The Hill reported. English most recently worked as the CFPB’s chief of staff as well as in key leadership positions at the bureau, according to a news release.

English is requesting a temporary restraining order against the Trump administration in the lawsuit, English v. Trump, et.al., No. 17-02534. The court held a hearing Nov. 27 and took the parties’ arguments under advisement.

The Trump administration argues that the Federal Vacancies Act gives the president the authority to appoint an acting director. And, Trump chose Mulvaney, director of the Office of Budget and Management.

Trump’s authority has support from the U.S. Department of Justice and the CFPB’s General Counsel Mary McLeod, according to media reports.

“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," White House spokeswoman Sarah Sanders said, according to Politico.

While the lawsuit to determine authority for appointing an interim director proceeds, President Trump will be responsible for appointing the next permanent leader of the CFPB, who will have to be confirmed by the U.S. Senate. That process could take months.

Before the hearing held Nov. 27, current and former members of Congress filed a motion for leave to file an amici curiae (“friend of the court”) brief in support of English and her request for a temporary restraining order.

According to the amici brief, “As members of Congress who were involved in the drafting and enactment of Dodd-Frank … amici are particularly well positioned to explain Congress’s statutory plan for the CFPB, the independence the Bureau was meant to exercise, and how those purposes would be undermined by allowing presidents to hand-pick an acting Director of the Bureau when a vacancy arises.”

ACA International will continue to provide updates on this developing story for its readers and members.

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