White House Criticizes CFPB for Naming Own Temporary Chief

News
November 25, 2017

WASHINGTON—A standoff between the Trump administration and Obama-era officials over who gets to temporarily run the Consumer Financial Protection Bureau intensified Saturday, with President Donald Trump saying on Twitter that the agency was “a total disaster as run by the previous Administrations pick.”

Mr. Trump and the CFPB each named a person to serve as temporary director starting Monday. The White House said its budget chief, Mick Mulvaney, would serve as acting director. Richard Cordray, who left the CFPB on Friday after a six-year tenure, said former chief-of-staff Leandra English would become deputy director, allowing her to serve in that role.

Ahead of Mr. Trump’s tweet, a senior White House official accused the agency’s former director of “provoking” a fight by naming his own temporary director.

CFPB spokesmen didn’t respond to a request for comment Saturday. Mr. Cordray couldn’t be reached for comment. On Friday, Mr. Cordray said his move to elevate Ms. English was meant to “minimize operational disruption and provide for a smooth transition given her operational expertise.”

The CFPB could go without a permanent director for months, raising the stakes for who temporarily oversees the bureau’s 1,600 employees when it reopens for business on Monday. Mr. Cordray’s temporary choice could continue an agenda opposed by Republicans, while Mr. Mulvaney could pause controversial initiatives that Mr. Cordray had pursued.

Mr. Trump is expected to unveil his choice for a permanent chief “in upcoming weeks.” The job requires Senate confirmation, where Democratic opposition is likely.

The president and Mr. Cordray are relying different parts of the law to defend their moves to assume control of the bureau, which was created as an independent regulator after the financial crisis.

Mr. Cordray cited the 2010 Dodd-Frank regulatory-overhaul law, which created the CFPB, in naming his interim replacement. “There is established the position of​ deputy director, who shall be appointed by the director; and serve as acting director in the absence or unavailability of the director,” Dodd-Frank says.

White House officials said Mr. Mulvaney’s appointment is governed by the Federal Vacancies Reform Act, which sets rules for vacant government agency positions and gives the president authority to appoint an acting director. In a memo issued on Saturday, the Justice Department said the Federal Vacancies Reform Act does give the president power for “temporarily authorizing an acting official to perform the functions and duties” of the CFPB’s director. The department said that while Dodd-Frank permits a properly appointed deputy to serve as a temporary CFPB director, that “doesn’t displace the president’s authority under the Vacancies Reform Act” to appoint an acting director.

Some experts, including Georgetown University professor Adam Levitin, have said the president lacked the authority to appoint an acting CFPB director. Others, such as Alan Kaplinsky, a Ballard Spahr lawyer critical of the CFPB, said Dodd-Frank “doesn’t expressly authorize” the deputy director to serve as acting director when a vacancy is created.

The Thanksgiving weekend face-off has fueled concerns among financial-industry experts about the agency’s operations as the White House and CFPB officials tussle over its interim leadership.

“There will be confusion and chaos,” said Richard Hunt, chief executive of Consumer Bankers Association, a trade group. “I am hoping come Monday, adults will prevail so we can have an orderly transition and get on with the business of the CFPB.”


Richard Cordray, shown in March 2015, tendered his resignation as director of the Consumer Financial Protection Bureau on Friday and simultaneously named his own successor. Photo: Steve Helber/Associated Press

The White House officials said Mr. Mulvaney, known as a harsh critic of the CFPB, is expected to start working at the regulator on Monday, side by side with Ms. English.

“We don’t have any reason to think anything out of the ordinary course will happen,” the senior administration official said on a conference call with reporters on Saturday. “He will show up Monday, go into the office and start working.” He said he hoped the disagreement wouldn’t result in a legal battle with Mr. Cordray, adding the White House will be observing “how Ms. English decides to act.”

The White House officials signaled Mr. Mulvaney could implement significant changes at the CFPB even as an interim director. His continued role as the White House budget director makes him a suitable official to review the CFPB’s budget and ascertain whether the agency is using its funds “in the most economical way,” they said.

Mr. Mulvaney’s appointment has prompted protests from consumer advocates and Democratic lawmakers, who worry that he will dismantle the agency created after the financial crisis to tip the balance of power toward consumers from banks.