November 27, 2017 / 4:01 PM / in a year

Breakingviews - CFPB leadership row won’t stop inevitable gutting

Office of Management and Budget Director Mick Mulvaney attends the daily briefing at the White House in Washington, U.S., July 20, 2017. REUTERS/Carlos Barria - RC18496A3530

WASHINGTON (Reuters Breakingviews) - The leadership row at the U.S. Consumer Financial Protection Bureau won’t stop its inevitable gutting. It’s unclear who’s in charge at the agency. Richard Cordray, the departing Barack Obama-appointed director, named his temporary successor, as did the White House, provoking an unusual legal fight.

CFPB employees came to work Monday not knowing who their boss is. Cordray appointed his chief of staff, Leandra English, as deputy director and acting director in his resignation letter on Friday. Shortly afterward, President Donald Trump named his budget chief, Mick Mulvaney, to fulfill the acting director role. English sued the Trump administration on Sunday, saying she is the “rightful acting director.”

It’s unclear how a federal court will rule. Senior Trump officials point to the 1998 Federal Vacancies Reform Act, which authorizes the president to appoint acting heads of agencies when a director resigns or dies. Bolstering their case, CFPB general counsel Mary McLeod sided with the administration. English points to the 2010 Dodd-Frank Act, which created the CFPB and states that the agency’s deputy director would temporarily take over when a director leaves.

The court battle may only delay long-running Republican efforts to hollow out the agency. Trump has the power to nominate a permanent director so it’s only a matter of time before his pick takes over. The president tweeted Saturday that the agency, which has slapped financial firms with nearly $12 billion in fines and restitution, has been a “total disaster,” while Mulvaney has described it as a “sad, sick joke.”

That means the CFPB could eventually look like the Environmental Protection Agency and other departments that Trump appointees have largely neutered. Unlike other financial regulators, the CFPB is led by a sole director instead of a commission or board, giving the agency’s head a lot of power. Congress also doesn’t control the CFPB’s budget, diminishing the ability of pro-agency Democrats to protect it.  

Obama had to fight to install Cordray as director in 2011 after Republican opposition forced him to drop Elizabeth Warren, who had championed the agency’s creation. She now defends it from her seat in the Senate, tweeting on Sunday that the president was “attempting to override Dodd-Frank.” But with the GOP in charge, the party is in payback mode. Eventually, Trump will be able to make good on his promise to eviscerate the watchdog.


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