A court fight may be brewing over President Donald Trump’s move to make a close aide interim leader of a consumer protection agency assailed by Republicans and championed by Democrats, displacing the official elevated by the departing director, an Obama-era appointee.
Both the Trump administration and Richard Cordray, who submitted his resignation as agency head Friday, contend the law is on their side and that their pick is the rightful leader.
Trump’s choice as head of the Consumer Financial Protection Bureau is his budget chief, Mick Mulvaney, a former congressman who’s called the agency a “joke,” an example of bureaucracy run amok. He is expected to dismantle much of what the bureau has done.
Cordray, long criticized by congressional Republicans as overzealous, made chief of staff Leandra English the deputy director, and Democrats say that under the law creating the agency, that official takes over when the No. 1 steps aside.
A Senate GOP leader pledged swift action whenever Trump nominates a permanent head of the agency but believes the dispute with Democrats over the temporary appointment “ends up in court.”
Beyond the fight over who’s calling the shots come Monday is the future direction of the bureau, created after the 2008 financial crisis and given a broad mandate as a watchdog for consumers when they deal with banks and credit card, student loan and mortgage companies, as well as debt collectors and payday lenders.
“All Americans should be deeply concerned about the White House’s cynical decision to flout the law and attempt to put the ringleader of its dangerous, anti-consumer protection policies in charge,” House Democratic leader Nancy Pelosi of California said in a statement.
Taking aim at Mulvaney, she said the public deserves “a champion that protects them from predatory bankers and lenders, not the leadership of a Wall Street pawn who denigrates consumer protection as a ‘sick, sad joke.’”
Democrats, she said, “will be firm in defending the rightful appointment” of English as acting director.
Sen. John Thune of South Dakota, the third-ranking GOP leader, said he expected that Mulvaney “will be on the job and he’ll be calling the shots over there” on Monday. But, he added, “ultimately, this may end up in court.”
With Mulvaney there “for the foreseeable future,” Thune said on “Fox News Sunday,” he hopes eventually to see “reforms to that agency, which has essentially very little accountability to the Congress or anybody else.”
In installing Mulvaney, the White House has cited the Federal Vacancies Reform Act of 1998. Administration officials acknowledge that some other laws appear to clash with the Vacancies Act but said that in this case, the president’s authority takes precedence.
In tapping English, Cordray relied on the Dodd-Frank Act, which created the agency, for the chain of succession.
That law says that “when the director steps aside, the deputy director shall be in charge of the agency — not may, shall be in charge,” said Illinois Sen. Dick Durbin, the No. 2 Democrat.
He said on CNN’s “State of the Union” that “Wall Street hates it like the devil hates holy water. And they’re trying to put an end to it with … Mulvaney stepping into Cordray’s spot. But the statute is specific, it’s clear, and it says that the deputy shall take over.”
But Sen. Lindsey Graham, R-S.C., said he thinks Trump was on “good ground” to pick Mulvaney for the job and hopes Mulvaney “will ride herd on these folks.”
It’s unclear when Trump might nominate a permanent director, who is subject to Senate confirmation.
“The best thing Congress can do is the president make a permanent nomination and we’ll process it as quickly as we can in the Senate and get somebody installed as soon as possible. That ultimately is the best way to resolve this,” Thune said. “In the meantime, the president has made this appointment. I suspect maybe that it gets litigated, that it ends up in court.”
In a memo about its opinion, the Justice Department’s Office of Legal Counsel said the president has the power to appoint an acting director of the agency. Steven A. Engel, newly confirmed head of the office, wrote that, while the deputy director may serve as acting director under the statute, the president still has authority under the Vacancies Reform Act.
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