The Consumer Financial Protection Bureau (CFPB) was the brainchild of Senator Elizabeth Warren as an outcome of the Dodd-Frank legislation. With the CFPB Pocahontas tried to set up the head of the agency, the Director, in a manner that that he/she would operate without oversight. Unfortunately, her dictatorial-fiat-design collapsed when challenged in court. Backstory #1 – Backstory #2
A federal court found the CFPB Director position held too much power and deemed it unconstitutional. The court decision noted that giving the President power to fire the Director would fix the constitutional problem.
However, with the prior court ruling as a backdrop, a second issue for Warren surfaces as an outcome of the current CFPB Director, Richard Cordray, resigning and President Trump appointing an ‘interim’ head for the agency.
Senator Warren, apoplectic at the thought of CFPB critic Mick Mulvaney acting as head of the agency, wants the Deputy Director, Leandra English, to become Acting Director and points to Warren’s legislative outline as evidence to support her demand. Except it doesn’t…. not even a little bit.
The language Pocahontas points to in the CFPB construct, points to the Deputy Director filling in during the “absence” or “unavailability” of the Director. The statute clearly does not provide a mechanism when the Director position is “Vacant”.
President Trump has power to appoint the interim or ‘acting‘ head of the agency in the case of a vacancy just like he would any other vacancy. [Important Reminder: A DC appellate court already ruled the legal issues with the CFPB Director position necessitate oversight by the executive branch.] The President fills the vacancy using the familiar mechanism of the Federal Vacancies Reform Act (FVRA); until such time as a permanent replacement is nominated and confirmed by the Senate.
The Dodd-Frank statute Warren cites doesn’t provide a mechanism in case of vacancy. It has a provision for when the Director is “absent” or “unavailable”, both considered temporary terms by design, but not when the Director-ship is “vacant”.
The resigning director, Richard Cordray, (who resigned from a confirmed position) cannot appoint his replacement; that responsibility falls to the President.
Nowhere in Dodd-Frank statute does congress say they are repealing Federal Vacancies Reform Act for the Consumer Financial Protection Bureau. Therefore FVRA applies to CFPB regardless of whether Senator Warren likes the designated person assigned, or not.
As Sheldon Gilbert rightly points out:
1) In pari materia: with regard to vacancies, courts have to construe the two statutes (Dodd-Frank and FVRA) so that both make sense. The clearest way to do that, Dodd-Frank doesn’t address “vacancies” in a manner inconsistent with FVRA.
2) Ordinary or canon language: “absent” and “unavailable” are not ordinarily given the same meaning as “vacant.” Congress knows how to talk about vacancies in organic statutes; it does it all the time. But it didn’t do that in Dodd-Frank for the CFPB. Ergo the Federal Vacancies Reform Act applies.
(Via Reuters) – Trump named White House budget director Mick Mulvaney, a fierce critic of the agency, to temporarily oversee the CFPB until he nominates someone to take on the job – a pick expected in upcoming weeks, senior administration officials told reporters on a conference call.
Democrats, accusing the White House of finding a backdoor method to defang a banking watchdog, point to language in the Dodd-Frank law that created the CFPB, stipulating the deputy director replaces the director when he or she leaves.
But administration officials said the 1998 Federal Vacancies Reform Act gives presidents the power to temporarily fill agency positions, except for those with multi-member boards – an exemption that they said did not apply to the CFPB.
“We believe this move by the president is a typical routine move exercised by presidents,” said one of the officials, who spoke to reporters on condition of anonymity, noting the White House had sought guidance from the Justice Department before Trump named Mulvaney to the job.
The Justice Department’s Office of Legal Counsel will soon publish a formal view, the officials said.
Cordray was the CFPB’s first director, so this is the first time the agency’s succession plan has been tested.
Republicans have complained the agency is too powerful and lacks oversight from Congress on its operations. Industry critics said the succession battle was a case in point of how the agency had too much power.
“The CFPB’s current governing structure is a dictatorship, period,” Richard Hunt, head of the Consumer Bankers Association, said in a statement.
[…] Trump’s nominee must be confirmed by the U.S. Senate, meaning that Mulvaney could be the acting director for months.
The fight has raised practical questions about how the agency would operate when its doors open on Monday.
The White House has not been in touch with Leandra English, the deputy who Cordray put in charge, officials said, saying they expected she would be at work on Monday and continue as Mulvaney’s deputy.
“We don’t have any reason to think that anything out of the ordinary course will happen: we think (Mulvaney) will show up Monday and he will go into the office and start working,” a senior administration official said.
“We have gone out of our way to avoid an unnecessary legal battle with Mr. Cordray and his actions clearly indicate that he’s trying to provoke one,” another official said.
The issue will likely be challenged in courts, which could mean “this enormous cloud of uncertainty” hangs over the CFPB in the meantime, said Alan Kaplinsky, who heads the Consumer Financial Services Group for Ballard Spahr LLP.
Kaplinsky said he believes the Dodd-Frank law provides for the deputy director to take charge during a shorter-term leave, but Congress did not explicitly list the resignation of the director as a situation where the deputy would step up.
“I think Trump wins, but unfortunately it is going to take a while,” Kaplinsky said. (link)
While in congress Mick Mulvaney, along with dozens of Dodd Frank critics, strongly opposed the creation of the CFPB and the scope of control within its mandate to regulate all consumer financial transactions. During his confirmation hearing Mulvaney referred to the CFPB as “one of the most offensive concepts” in the U.S. government and that he stood by an earlier comment describing it as a “sad, sick joke.”
The Democrats, most specifically Elizabeth “Pocahontas” Warren and crew, are apoplectic at the end result of their too-cute-by-half plans and the possibility of their agency being deconstructed. What is even more delicious to note – in their rush to construct the entire CFPB scheme the Dodd-Frank law does not specify the deputy director as next in line to serve in the event of a vacancy. That means President Trump is within his normal constitutional powers to appoint whomever he likes.
In appointing Mick Mulvaney President Trump has now put in place someone who can be counted on to deconstruct Warren’s leftist plan to control all our financial transactions by dictatorial fiat and unilateral authority. By their own doing Pocahontas et al created a situation they are now powerless to stop.