Trump Vows to Revive ‘Total Disaster’ Consumer Bureau With Mulvaney

Updated on
  • Budget chief named as consumer watchdog agency’s acting head
  • Outgoing CFPB chief Cordray had already named his successor

CFPB Leadership Becomes Washington's New Flashpoint

A high-stakes legal clash is unfolding over President Donald Trump’s temporary pick to run Elizabeth Warren’s favorite bank regulator, and the White House is holding its ground.

Trump on Friday said he’s naming White House budget director Mick Mulvaney to be the temporary head of the Consumer Financial Protection Bureau. The announcement came hours after outgoing CFPB Director Richard Cordray said he was tapping a deputy to run the agency on an acting basis, a move widely seen as an attempt to prevent the White House from naming a successor.

The CFPB “has been a total disaster as run by the previous Administration’s pick,” the president said on Twitter late Saturday. “Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!”

With two officials having been appointed to the same post, it’s unclear who’ll be in charge of the consumer regulator’s more than 1,000 employees when they come to work on Monday. It’s possible the dispute will play out in the courts for months until a permanent successor is named and confirmed by the Senate.

Replacement Soon

A senior White House official said on Saturday that Trump is expected to decide on a permanent replacement for Cordray in the coming weeks.

Republicans are eager to start remaking the six-year-old agency, which they blame for burdening banks with unnecessary rules and have criticized as being unaccountable. Cordray and other Democrats are desperate to keep it out of the administration’s grip as long as they can.

Cordray, 58, appointed by former President Barack Obama, officially stepped down on Friday. As he exited, the former Ohio attorney general announced that his chief of staff, Leandra English, would become deputy director and thus automatically rise to serve as acting director when he left.

But there’s a legal debate over how much power Cordray has to name his replacement. The White House indicated that Trump believes he has the authority to name the agency’s interim leader using a federal vacancies law. The administration consulted with the Office of Legal Counsel, a unit of the Justice Department, before making the decision, White House officials said.

‘Empower Consumers’

“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 said in a statement. “Director Mulvaney will serve as Acting Director until a permanent director is nominated and confirmed.”

As director, Mulvaney, 50, is expected to bring sweeping changes to an agency he’s called “the very worst kind of government entity.” Mulvaney will continue to serve as director of the Official of Management and Budget while also filling in at the CFPB starting on Monday, senior White House officials said. The officials deferred to Mulvaney questions on how he’d manage his time between the two jobs.

Succession of the CFPB director is disputed by legal experts and is the latest source of partisan bickering over the agency’s power and structure. The Dodd-Frank Act states that the deputy director is in charge “in the absence or unavailability” of the director.

To read more about the CFPB, click here.

Democrats including Cordray and Senator Warren of Massachusetts, who’s credited with having helped create the CFPB, believe that means English -- a senior adviser to the OMB during the Obama administration -- is now in charge. On the other hand, a federal vacancies law allows the president to name a temporary head of an agency when the director resigns. The White House believes the Vacancies Act takes precedence.

Cordray announced on Nov. 15 that he planned to resign, amid speculation that he’ll run for governor of Ohio as a Democrat. The role of deputy director had been vacant for months before Cordray named English, a move that banking industry lobbyists says creates uncertainty in the marketplace and illustrates the flaws of having just one person in charge of the bureau.

“This is absurd that we may have a pay-per-view event when Mulvaney walks in on Monday,” Consumer Bankers Association President Richard Hunt said in an interview. “It was a little arrogant that Cordray believes he could pick his own successor.”

Partisan Bickering

The CFPB was established in the wake of the global financial crisis to police credit cards, auto loans, and other consumer finance products. Since its inception the agency has often been at the center of bitter partisan bickering. Democrats, led by Warren -- a special adviser to the CFPB before its launch -- have praised the agency for returning billions of dollars to harmed consumers. Republicans call it a “rogue” entity with a leader that wields too much unchecked power.

Warren backed Cordray’s move to appoint his deputy. She wrote on Twitter late Friday that “the Dodd-Frank Act is clear: if there is a CFPB Director vacancy, the Deputy Director becomes Acting Director. Donald Trump can’t override that.”

“Donald Trump can nominate the next CFPB Director -- but until that nominee is confirmed by the Senate, Leandra English is the Acting Director under the Dodd-Frank Act,” Warren wrote.

— With assistance by Margaret Talev

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