Mick Mulvaney marched into the D.C. headquarters of the Consumer Financial Protection Bureau Monday morning with Dunkin' Donuts.
Office of Management and Budget Director Mulvaney, thanks to a sudden resignation and a subsequently speedy administration appointment, has now become Acting CFPB Director. The only problem? The outgoing director appointed his chief-of-staff, Leandra English, as successor, thereby setting up a confusing and controversial power vacuum.
Bureaucrats and regulators started their work week not knowing who was in charge of the agency. Suddenly, bringing donuts to work didn’t seem like such a bad idea.
Exits and Entrances
Richard Cordray officially clocked out of the CFPB early on Friday. The very first director of the CFPB had been appointed by President Barack Obama in 2012 and had more than eight months left in his five-year term. Before leaving the agency, Cordray announced his “decision to reassign Leandra English to the position of deputy director, a reassignment she has accepted and that has been effectuated.”
Unwilling to allow an Obama appointee to take the reins, President Trump countered Friday night with his designation of Mulvaney as interim director. That budget wonk and administration loyalist, the White House said in a statement, would serve at the CFPB “until a permanent director is nominated and confirmed.”
Legally speaking, who’s the boss?
Lawyering up quickly, English filed suit in federal court against the administration and Mulvaney, “in his capacity as the person claiming to be acting director of the Consumer Financial Protection Bureau.” And Monday morning, English sent out staff-wide emails signed “acting director.”
As the two claimed the same title, armies of lawyers drew battle lines — the English camp appealing to section 1011(b)(5) of the Dodd-Frank Act and the administration to the Vacancies Reform Act of 1988.
“The Dodd-Frank Act is clear,” tweeted Sen. Elizabeth Warren in support of English “if there is a @CFPB Director vacancy, the Deputy Director becomes Acting Director. @realDonaldTrump can’t override that.”
Others insist instead that federal vacancy law precedes and supersedes the CFPB. “By designating OMB Director Mulvaney to serve as Acting CFPB Director,” fired back Adam White of the Hoover Institute, “under 5 U.S.C. 3345, there is no vacancy (or, more precisely, no “absence or unavailability”) to be filed by the CFPB’s Deputy Director per 12 U.S.C. 5491.”
Who is in control?
According to the White House, Mulvaney walked into the director’s office with breakfast cakes in hand and the “full cooperation” from agency staff. No doubt that confidence was buoyed by both the top lawyer at the CFPB and the Justice Department.
The top lawyer for the U.S. Consumer Financial Protection Bureau (CFPB) has concluded that President Donald Trump has the authority to name its acting director, three sources familiar with the matter said on Sunday, rejecting an effort by her former boss at the agency to name his immediate successor.
The office of CFPB General Counsel Mary McLeod has prepared a memo concurring with the opinion of the U.S. Justice Department that Trump has the power to appoint his budget chief, Mick Mulvaney, as temporary leader of the federal watchdog agency, according to the sources, who spoke on condition of anonymity.
Policy (and politics) at play
From his OMB perch, Mulvaney serves as top fiscal hawk tracking each federal penny spent. His aggressive defense of the administration on cable television has made him a Trump favorite. So why would the president make him take on the CFPB on top of his already heavy budget workload? It’s certainly not sadism. Just politics.
If Trump hadn’t named Mulvaney interim-director, English could’ve thrown up regulatory barricades to preserve the infrastructure of the agency.
As Justice Department veteran Shannen W. Coffin explains over at The Weekly Standard, waiting for a Trump nominee to clear the Senate could “extend Cordray’s regulatory mischief and forestall efforts to roll back the CFPB’s regulatory programs.”
Imagining the two-step is easy. Democrats block the Senate pass for any Trump nominee, leaving the directorship empty for weeks, if not months. Meanwhile English can make the CFPB a regulatory island safeguarding the original Obama vision for the agency.
A risky but not unrewarding move, Cordray essentially tried extending his legacy by installing a sympathetic stooge. Quitting early also had another benefit: Cordray is expected to run for Ohio governor.
Former Rep. Dennis Eckart, D-Ohio, told the Columbus Dispatch on Friday that “several prominent Democrats have told me this morning they expect Cordray to run for governor.” He added that the gubernatorial hopeful has “a compelling story,” one that no doubt will be bolstered by the coming and prolonged legal fight with the Trump administration.
Senate battle lines
More than any other Democrat, the CFBP is the bureaucratic baby of Sen. Elizabeth Warren, D-Mass. She brought it into being and she hasn’t taken kindly to Republican attempts to influence the young agency. “Trump has put a cloud of uncertainty over the CFPB by attempting to override Dodd-Frank,” the progressive senator declared. "Mulvaney should take no action until this dispute is decided in the courts."
But colleagues of Warren have not shied away from reminding the senator that elections have consequences. If there is a civil war at the agency, Sen. Tom Cotton, R-Ark., wants blood.
Slamming the English suit as “lawless” and “rogue,” that Arkansas Republican urged Trump to “fire her immediately and anyone who disobeys Director Mulvaney's orders should also be fired summarily. The Constitution and the law must prevail against the supposed resistance."