The Consumer Financial Protection Bureau Leadership Dispute

Today (November 27, 2017 the Consumer Financial Protection Bureau (“CFPB”) has two persons claiming to be the Acting Director. One is a career civil servant, Leandra English. She had been chief of staff to the previous director, Richard Cordray. He promoted her to be Deputy Director on Friday before abruptly resigning. She rests her claim on a provision of the statute creating the CFPB. Following that on Friday, the White House announced that President Trump had appointed Mick Mulvaney, the OMB Director, to be Acting Director of the CFPB (he is not leaving his OMB position). The White House and the Office of Legal Counsel of the Justice Department argue that the Federal Vacancies Reform Act of 1998 provides the President the authority to do this, no matter what the specific statute creating the CFPB says. The General Counsel of the CFPB, Mary McLeod, issued a memo to CFPB staff on Sunday stating she agrees with the Justice Department opinion and that staff should consider Mulvaney the Acting Director. Also, on Sunday, English filed a lawsuit against President Trump and Mulvaney in the U.S. District Court of the District of Columbia claiming that they were attempting to deprive her of her rightful position at the agency. 

Those wanting to read legal arguments and opinions about who is right in this dispute need to go elsewhere. What I want to do in this post is to raise some issues and questions that I do not think have been adequately focused on in news reports about this dispute.

First, there is some mystery about what Cordray and English are thinking.

·       Why did Cordray suddenly move up his resignation date one week and announce his departure and the appointment of English on the day after Thanksgiving (a holiday for many but not for the federal government)?

·       Why did Cordray not prepare the way for English to assume the Acting Director position by assuring himself that she would have the support of the CFPB General Counsel. Mary McLeod was appointed by Cordray; if he had discussed this with her and found he disagreed with her opinion, he could have appointed someone else General Counsel before he left. While his departure was abrupt, it was in the works for some time, and, in any case, he would have had to leave next year when his term expires.

·       What do Cordray and English hope to accomplish by this dispute? After all, Trump can nominate someone to his liking to head the agency, and barring someone clearly unqualified, the Republican-controlled Senate will vote to approve the choice. That person can undo whatever actions a temporary director has taken and much else besides.

·       Prior to Friday, the acting Deputy Director of the CFPB had been David Silberman. Why had Cordray not acted in the past to remove the “acting” from his title? One possible explanation for choosing English over Silberman is that Silberman had no appetite for the inevitable legal dispute. Silberman is still at his job at the CFPB as Associate Director for Research, Markets, and Regulation. No matter how the current legal dispute is resolved, English will almost certainly not be an employee of the CFPB in a few months. Perhaps she was willing to take on this thankless role because she planned to leave or retire from the federal government in any case.

These issues indicate that there is much about this bizarre episode that is not in the public domain. Probably some staffers at the CFPB know what it is, but there are likely few, if any, reporters who have cultivated sources at the agency sufficient to get leads as to what is really going on.

As for the Trump Administration, there is some mystery too.

·       Why did they choose to wage this high-profile fight, since they will in a relatively short time be able to get their own person in as Director of the CFPB? What is it they hope to accomplish by this maneuver?

·       Their legal case is not a slam dunk. They may prevail in court, but, if they lose, they may have established a precedent that could prove troublesome for them and successive Administrations. Why do they think this legal dispute is worth having the courts resolve over this particular agency, since their risk of losing is hardly minimal?

·       Politically, the Democrats will naturally claim that this shows that the Administration sides with banks and not the consumer. The Administration’s action highlights the role of this agency, including going after Wells Fargo and its establishment of accounts for its customers that they did not ask for or want. If the Administration wants to ease up on banks, it would seem politically expedient to do this quietly, not nosily as they are now doing. What does the Administration hope to gain by making all this noise?

Perhaps, the Administration is being politically incompetent, which, given its record so far, is not a surprise. But the questions about Cordray suggest that there is something going on that has not been made public. I am curious what it is we don’t know about this bizarre situation.