Whose Agency is it Anyway? CFPB Has Two Acting Directors

The Consumer Financial Protection Bureau currently has two separate officials claiming to be its acting director, causing mass confusion at the financial watchdog agency — though some experts say change will be slow no matter who sits at the top.

In a rapid-fire series of events, Richard Cordray stepped down the day after Thanksgiving; the first and so far only CFPB director had previously announced his intention to leave the bureau earlier this month.

Before the resignation became effective, Cordray appointed Leandra English, formerly the CFPB’s chief of staff, as deputy director.


“As deputy director, we will continue to benefit from Leandra’s in-depth knowledge of the operational needs of this agency and its staff,” Cordray sad in a statement officially released by the CFPB.

But later in the day Friday, President Donald Trump “designated” Mick Mulvaney, currently the director of the Office of Management and Budget (OMB), as acting director of the CFPB. Mulvaney, who once said he didn’t think the CFPB should exist at all, had been rumored as the White House’s top pick for Cordray’s successor.

“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,” a White House statement read.

When the Monday morning after the long Thanksgiving weekend came, the agency suddenly saw itself with two acting directors: Mulvaney showed up to the bureau’s headquarters with donuts, according to the New York Times, and OMB communications director John Czwartacki tweeted out a picture of Mulvaney in the director’s office.

“Already hard at work as acting director at cfpb,” the tweet read.

English, meanwhile, met with lawmakers on Capitol Hill in her official capacity as acting director, according to the Times. She also filed a lawsuit against the president, arguing that the Dodd-Frank Act of 2010 — which formally created the CFPB as an independent bureau — legally requires the deputy director to helm the department on an acting basis.

“Ms. English has a clear legal entitlement to the position of Acting Director of the CFPB,” the lawsuit claims in seeking to block Mulvaney’s appointment. “At the moment that Director Cordray’s resignation became effective, she was the bureau’s deputy director.”

But that legal entitlement may not be as clear as English’s camp claims. There’s never been a precedent for a transition of power at the CFPB, and Dodd-Frank only specifies that a deputy director can become acting director “in the absence or unavailability of the director.”

“Is this an absence or an unavailability, when he resigns and ends his term? I think that’s not the most straightforward reading of the statute,” lawyer Christopher Willis told RMD.

Willis, a partner who leads the Consumer Financial Services Litigation Group at Ballard Spahr, LLP, said he thinks Trump has the legal upper hand.

“I actually think the president has the better end of the argument,” said Willis, adding that existing federal law that empowers the president to appoint temporary department heads may be more applicable in this situation.

Allowing a departing CFPB director to hand-pick his or her replacement could also have wider-reaching effects should it become an established Washington practice.

“If you say that the previous director can name his or her successor, then you’ve created a self-perpetuating bureaucracy that’s really outside the control of the political branches of government,” Willis said.

“Allowing the president to appoint the acting director makes the agency more responsive to the political process, more democratic,” he said.

When asked for comment on the situation, a spokesperson for the CFPB directed Reverse Mortgage Daily to the OMB’s Czwartacki. Czwartacki did not respond to a request for comment as of press time.

An uncertain future

A federal judge could hear this case in a matter of days, Willis said, and eventually either Mulvaney or English will emerge as the lone acting director. But the president will still need to name a permanent replacement who must survive a Senate confirmation — and with some Republicans distancing themselves from the unpopular president, the White House shouldn’t expect a rubber-stamped pick.

“In the long term, President Trump would presumably want to appoint someone who is more industry-focused than Richard Cordray was, obviously, but the position of the Republicans in the Senate might mean that you have to have more of a compromise candidate,” Willis said.

In addition, just because a director might want to take the department in a certain direction, that doesn’t mean the rest of the rank-and-file members will follow. The bureau consists primarily of Obama-era appointees who may not be keen on a Republican leader’s vision for the CFPB. At the very least, this could have a major effect on CFPB investigations that are currently underway but have yet to be formally announced, lawyer Joseph Lynyak III told RMD.

“If there’s something in the pipeline, it’s probably going to be difficult to slow that down,” said Lynyak, a partner at Dorsey & Whitney LLP who works in the firm’s Finance and Restructuring Group.

Lynyak also questioned whether an acting director would be able to effect substantial change, but indicated that an anti-regulation pick like Mulvaney could subtly change the overall culture.

“You may not like individual enforcement actions, but that’s quite different from willy-nilliy issuing rules that don’t make any sense,” he said. “You may not like an individual enforcement action during this interim period, but that’s not what really counts.”

Written by Alex Spanko

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  • I can tell everyone reading my comment this, the agency sure is not in the hands of the American people and never has been!

    The CFPB has always been a troublesome part of the Dodd-Frank bill in my opinion. As far as I always have been concerned, the CFPB has been anything but a consumer protection agency.

    The CFPB has imposed more regulations on our financial industry than I can ever remember!

    As far as what the CFPB is today, it is a mess, worse than ever. This whole situation is embarrassing and to see tax payers dollars being spent on law suits over this is pure criminal!

    This is just another political nightmare, it is like a puzzle with no way to put it together! What else is new?

    John A. Smaldone

  • The attempted soft coup by outgoing director Cordray failed for it’s lack of legal standing. The temporary restraining order filed by the new ‘interim director’ appointed by the outgoing director was summarily denied and overturned by a federal judge. It appears that the executive branch can indeed appoint agency heads as current law prescribes.

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