Lawyers side with Trump in battle over CFPB leadership

Protesters still plan to gather

In the latest development to the Consumer Financial Protection Bureau’s power struggle, lawyers sided with President Donald Trump and his appointment for acting CFPB director.

This past weekend, the CFPB erupted into chaos as two leaders are now appointed as acting director – and no one knows who to follow.

And both acting directors are now striving to assert their domination.

One director was nominated by former CFPB director Richard Cordray on his way out the door Friday. He promoted his chief of staff Leandra English as acting director to “ensure a smooth transition.”

But President Donald Trump didn’t agree with Cordray’s pick, or his right to choose anyone, and nominated Mich Mulvaney, who currently serves as director of the Office of Management and Budget and has long been outspoken about his dislike for the CFPB, as the acting director just hours later.

But now, global law firm Mayer Brown, the 15th largest law firm in the U.S., sided with Trump in its Consumer Financial Services Review blog. According to the firm, the law is clear – Mulvaney is the acting director of the CFPB.

Proponents of Cordray’s pick, including Sen. Elizabeth Warren, D-Mass., pointed out one line in Dodd Frank which gives the CFPB direction in absence of the director.

“There is established the position of Deputy Director, who shall – (A) be appoint by the director; and (B) serve as acting director in the absence or unavailability of the director.”

However, the law firm pointed out there is another law which overrides this one:

"But another federal law also addresses authority to fill vacant positions on a temporary basis—the Federal Vacancies Reform Act, enacted by Congress in 1998. As the Supreme Court explained in a recent decision, this statute sets limits on the appointment of individuals on an acting basis—because Congress perceived a threat to the Senate’s advice-and-consent power from the large number of individuals serving in a temporary capacity in offices for which permanent appointments would be subject to Senate confirmation."

The Act confirms that “the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity.”

The law firm explained that there is no serious argument that the Dodd-Frank Act precludes the president from appointing an acting director.

But that being said, Mayer Brown also clarified that Cordray acted within his power by appointing English as deputy director, and that, for the short time the Trump administration had not filled the vacancy, she did serve as acting director. However, once the president appointed his own acting director, English could no longer claim the position.

To read Mayer Brown’s full analysis, click here.

And other legal experts agree with this opinion, saying Trump was within his right to appoint the new acting director.

“The CFPB under Richard Cordray acted as something of a law unto itself, and Mr. Cordray's attempt to appoint his successor is no doubt intended to continue his aggressive policies and investigations,” Hinshaw & Culbertson Partner Edward Lenci said.

“President Trump’s proposal for interim successor to Mr. Cordray, Director of the Office of Management and Budget and former Congressman Mick Mulvaney, is consistent with both the President’s promises to tame the CFPB and his authority under the Dodd-Frank Act and the Federal Vacancies Reform Act,” Lenci said.

However, not everyone is convinced. Tuesday at 12:00 p.m. ET, protesters, including Warren, plan to gather at the CFPB as Mulvaney eats lunch to demand he “step aside and let acting CFPB director Leandra English do her job.”

“The Consumer Financial Protection Bureau is a resounding success and overwhelmingly popular with voters in blue, red, and purple districts,” said Maria Langholz, Progressive Campaign Change Committee campaigner.

“That's why Trump is trying to undermine the CFPB by breaking the rules to install a guy who is wholly unfit for the office and has numerous conflicts of interest,” Langholz said. “PCCC members will be taking the fight to Trump and Mulvaney [tomorrow].”

The PCCC announced it will make the case that the American people need a CFPB director who will uphold the law and protect working families against wrongdoings by Wall Street and giant corporations. The organization claims President Trump is breaking the law by installing Mulvaney as the director of the agency without Congressional approval.

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