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INSIDE Three strikes law in review in Va & U.S. - 2 Activist files suit over VBeach elections - 5 GRTC to honor rights icon Rosa Parks - 11 Va. business decries CFPB ‘Torture’ - 15
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WEDNESDAYS • Nov. 29, 2017
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CFPB battle with administration heads to court
The battle over leadership of a consumer watchdog created during the Obama administration headed toward a federal court showdown this week Leandra English, appointed as deputy director of the Consumer Financial Protection Bureau last week in an 11th-hour move by Richard Cordray, the bureau's departing chief, filed a lawsuit late Sunday seeking to block President Trump from naming his own pick to head the agency on an interim basis. English argued that she officially became acting director of the consumer bureau following Cordray's departure pursuant to the Dodd-Frank Act, the sweeping Wall Street reform law that created the watchdog after the financial crisis. Her lawsuit is aimed at blocking Trump’s Friday night appointment of Mick Mulvaney, the federal budget director, to serve as the consumer bureau's acting director until a new appointee is named and confirmed by the Senate. The unusual court fight deepened the uncertainty surrounding the future of a watchdog that has been alternately criticized by the financial services industry it oversees and congressional Republicans, even as it has drawn praise from consumer advocates. A nine-page legal memorandum filed on behalf of English argued that the Dodd-Frank Act mandates that the consumer bureau’s deputy director “shall ... serve as the acting director in the absence or unavailability of the director.” That provision means English “serves in that capacity until such time as the President appoints and the Senate confirms a new director,” the legal memo argued. English asked the U.S. District Court for the District of Columbia to issue a temporary restraining order barring Trump from naming an acting director of the consumer bureau and prohibiting Mulvaney from filling that role. However, a Saturday legal memo from the Department of Justice’s Office of Legal Counsel argued that a federal vacancies statute gives Trump authority “for temporarily authorizing an acting official to perform the functions and duties” of an executive agency director whose appointment “is required to be made by the president.”
John Czwartacki, Mulvaney’s communications director at the federal budget office, tweeted an early Monday morning photo showing his boss already at work in the consumer bureau’s Washington, D.C. headquarters. It was uncertain how soon the federal court would act on the lawsuit, and how the consumer bureau would function in the meantime. Cordray, the Obama appointee who served as the bureau’s first director, launched the battle Friday by formalizing his previously announced plan to resign. In a letter to Trump, he highlighted the bureau’s record of returning nearly $12 billion to consumers “cheated or mistreated by banks or other large financial companies.” While Cordray’s letter said his resignation would take effect at midnight Friday, it said nothing about a succession plan. However, in a separate email to staffers at the consumer bureau, Cordray announced he reassigned English, the agency's chief of staff, as deputy director. The elevation of English “would minimize operational disruption and provide for a smooth transition given her operational expertise,” Cordray wrote. Hours later, Trump announced that Mulvaney would instead head the consumer bureau temporarily. “The President looks forward to seeing Director Mulvaney take a common sense 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,” the White House announcement said. Alan Kaplinsky, leader of the Ballard Spahr LLP law firm's consumer financial services group, on Saturday tweeted that Trump should prevail in the legal fight because the Dodd-Frank succession process cited by English did not refer to the resignation of the consumer bureau’s director. “Absence or unavailability connotes a temporary status and, in my opinion, does not cover a resignation,” tweeted Kaplinsky, who added that he thinks Trump “should win.” He also predicted that the consumer bureau's daily operations would bog down during the court fight.