The Departing Consumer-Finance Director Moves to Thwart Trump

By appointing a new deputy director before resigning, Richard Cordray is signaling that the Bureau has no intention of letting the president name his own acting director.

Kevin Lamarque / Reuters

It was a move as calculated as it was  stealthy. On Friday, Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB) officially appointed Leandra English to the agency’s number-two position, deputy director. By installing an official deputy, Corday, who will officially resign by the close of business on Friday, is providing the agency with its best defense against a Trump appointee taking over the Bureau’s leadership. And signaling that the agency is willing to put up a fight to maintain its current trajectory.

A provision of the Dodd-Frank Act, the same act that created the agency in the first place, stipulates that the deputy director shall “serve as acting Director in the absence or unavailability of the Director.” Until Friday, the agency had only an acting deputy director. Without an official deputy, the question of who would lead the agency once the director resigned was likely to be fiercely contested. The stakes are high—the agency enjoys an unusual degree of independence, with its funds not coming from Congress and its directors serving five-year terms—and it has become a key battleground in the long-running fight between consumer activists and financial institutions, and between political parties.

The Trump administration had signaled its intent to replace Cordray with an acting director, using the Federal Vacancies Act—a statute which generally empowers the president to fill vacancies on an interim basis, unless some other mechanism is specifically authorized. Some observers had concluded that the language on succession in the Dodd-Frank Act was too vague to count, leaving Trump free to appoint an acting director. But after the Georgetown law professor Adam Levitin pointed out that the version of Dodd-Frank passed by the House had explicitly applied the Vacancies Act to the CFPB, and that the conference committee had stripped out that language, many legal scholars told The Intercept’s David Dayen that they believed that control of the agency would pass to the deputy director.

That placed political pressure on Cordray—who may harbor ambitions to run for governor of Ohio as a Democrat—to act. By formally naming a deputy director on Friday, he strengthened the CFPB’s hand in any ensuing legal battle for control of the agency. The Trump administration must now decide whether to simply allow English to become acting director, running the agency while it attempts to get a new nominee for director confirmed by the Senate, or whether it wishes to name its own acting director, a move that offer immediate control but would almost certainly wind up being challenged in court.

In a letter to staff announcing his official resignation on Friday, Cordray wrote, “Since its inception, the Consumer Bureau has stood on the side of Consumers to see that they are treated fairly. The ongoing and future work of the Consumer Bureau makes key contributions to the health of our economy and the well-being of all Americans.”

Trump’s choice, CBS  News reported, is Mick Mulvaney, currently the head of the Office of Management and Budget. Mulvaney has been a vocal critic of the CFPB. In fact, Mulvaney once called the Bureau a “sick sad joke.” Though Mulvaney wouldn’t have run day-to-day operations of the agency, his appointment as acting director would allow him to hire someone to oversee daily work and to set the agency’s broader agenda. Given Mulvaney’s history, that would likely have included a push for less regulatory action. Paul Bland, the executive director of the advocacy group Public Justice, called the potential appointment of Mulvaney as the head of the Bureau “a great tragedy for American consumers.”

Since its inception in 2010, the Bureau has issued rules and regulations on consumer products including payday loans, prepaid debit cards, and mandatory arbitration clauses. The agency has also fined many financial industry companies, including Wells Fargo and Equifax, for actions that hurt customers and created new opportunities for consumers to air grievances with financial institutions and learn about consumer products. Those actions, applauded by consumer groups, have led to mounting complaints from banks, financial institutions, and conservatives that the agency has overstepped its proper role and needs to be reigned in.

Before she was appointed to the role of deputy director, English served as the chief of staff for the Bureau. David Silberman, who had been the agency’s acting deputy director, will continue in the role of associate director of Research, Markets, and Regulation.