Drama swirls around CFPB as Obama holdovers conspire to keep control powerful rogue agency

OMB Director John M. “Mick” Mulvaney was appointed Friday as the temporary director of the Consumer Financial Protection Bureau by President Donald J. Trump. (file photo)

The self-described acting director of the Consumer Financial Protection Bureau petitioned a federal judge late Sunday to block President Donald J. Trump from putting John M. “Mick” Mulvaney, the director of the Office of Management and Budget in charge of the rogue agency.

Richard Cordray named Leandra English as his deputy director Friday, his last day in office, and as such set up the crisis, English seeks to resolve with her petition to the federal courts asking that she be recognized as the acting director until the president has his own selection confirmed by the Senate.

“Leandra is a seasoned professional who has spent her career of public service focused on promoting smooth and efficient operations,” said Cordray, a native of Ohio, widely expected to return home to run for governor there.

“As deputy director, we will continue to benefit from Leandra’s in-depth knowledge of the operational needs of this agency and its staff,” he said.

English had a series of positions at the CFPB, including serving as the bureau’s chief of staff and deputy chief operating officer. Before joining the CFPB, English had senior positions in President Barack Obama’s Office of Personnel Management and his Office of Management and Budget.

While the Wall Street Reform and Consumer Protection Act of 2010, also known by Dodd-Frank for its two main sponsors Rep. Barnett “Barney” Frank (D.-Mass.) and Sen. Christopher J. Dodd (D.-Conn.), states that the deputy director becomes the acting director, but the president issued this statement Friday:

Today, the President announced that he is designating Director of the Office of Management and Budget (OMB) Mick Mulvaney as Acting Director of the Consumer Financial Protection Bureau (CFPB). The President looks forward to seeing Director Mulvaney take a commonsense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities. Director Mulvaney will serve as Acting Director until a permanent director is nominated and confirmed.


The president is exercising his authority as spelled out in the Federal Vacancies Reform Act of 1998, which allows the president to fill any vacancies that required a presidential nomination and Senate confirmation for 90 days. This was the president’s authority at the beginning of his administration that allowed him immediately send “landing teams” throughout the executive branch.

Saturday, the Justice Department sent a memorandum to White House Counsel Donald F. McGahn II with its interpretation of vacancies law, which acknowledges the conflict between Dodd-Frank and the 1998 law, but ruling that because the Dodd-Frank law is vague and puts no limit on the “temporary” filling of the vacancy at the CFPB, it must yield to the vacancies act.

Also, Saturday the CFPB’s top lawyer Mary McLeod circulated a memorandum, obtained by Politico, advising all CFPB employees to regard Mulvaney as the acting director.

Questions have been raised whether the President has the authority under the Federal Vacancies Reform Act (FVRA) to designate Mick Mulvaney, the Director of the Office of Management and Budget, as the Acting Director of CFPB following the resignation of Richard Cordray as of midnight, Friday, November 24, 2017, even if the Deputy Director otherwise could act under 12 U.S.C. § 5491(b)(5).

“This confirms my oral advice to the senior leadership team that the answer is “yes,” she wrote. “I advise all bureau personnel to act consistently with the understanding that Director Mulvaney is the Acting Director of the CFPB.”

Take note: McLeod’s memo and advice was circulated one day before the CFPB’s senior leadership team went ahead and filed suit in federal court.

The true foundress of the CFPB is Sen. Elizabeth Warren (D.-Mass.), who as an aide to President Barack Obama and a law professor at Harvard University.

It was Warren, who devised the CFPB’s convoluted governance with an all-powerful director and a relationship to the federal government that made it immune to congressional oversight by having it funded by the Federal Reserve, but with the central bank exercising any supervisory control.

Beyond the unprecedented independence of the bureau, the CFPB has enormous powers to interfere in private businesses and transactions, as well as its receiving a copy of every financial activity in the country.

From the bureau’s beginning, Congress has been concerned about so much power and access in the hands of the CFPB without oversight, but the agency, as designed by Warren, does not answer to Congress, it is only required to appear before the Senate Banking Committee and the House Financial Services Committee every six months.

Cordray’s last-minute move cannot be seen as anything other an attempt by members of the previous administration to hold onto a powerful and secretive agency with characteristics that could have it described the NSA of finance.

Rep. Jeb Hensarling (R.-Texas), the chairman of the House Financial Services Committee, pressed Cordray on his plans in August, because his five-year term did not expire until July.

President Barack Obama delivers remarks at the Consumer Financial Protection Bureau in Washington, D.C., Jan. 6, 2012. CFPB Director Richard Cordray, left. (Official White House Photo by Pete Souza)

Cordray was appointed as the director in 2012, but Senate Republicans kept the Democrats from the 60 votes required to end debate. When Senate Majority Leader Harry Reid (D.-Nev.) changed the Senate rules to remove the 60-vote requirement in July 2013, Cordray’s nomination was quickly confirmed. In another example of the Byzantine character of the CFPB, the Dodd-Frank law said that the bureau’s first director would run the agency as part of the Treasury Department, but as soon as the first director is confirmed, the agency would be spun-out of Treasury and put under the aegis of the Federal Reserve.

Hensarling said concern was that Cordray would rush the completion of a new regulatory regime, so that the director could resume his political career back home.

The tragedy of the star-crossed CFPB has not yet played out, but the next twist could be that Hensarling, who himself is retiring from Congress at the end of this session, could himself end up the next director of the bureau.

Our Latest Articles