Donald Trump Is Right About Who Serves as the Acting Director of the CFPB

The Consumer Financial Protection Bureau, which sounds like something you’d find in a 1930’s pulp fiction magazine, was borne out of the Dodd-Frank Financial Regulatory Reform Bill of 2010. Adding yet another layer of bureaucracy to an already bureaucratic consumer protection arm of the federal government, the CFPB operates like no other agency in the federal government.It is not accountable to Congress. Funding for the agency comes from the Federal Reserve, not a congressional appropriation. The director can only be terminated by the president for "inefficiency, neglect of duty or malfeasance.” The structure of the CFPB faces a challenge in the courts. In 2016, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled the structure is unconstitutional and said:"The Director enjoys significantly more unilateral power than any single member of any other independent agency. By “unilateral power,” we mean power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power."The court vacated that decision (at the request of the CFPB) and the full circuit court will make a final decision. It is likely any ruling will be appealed to the Supreme Court, so we won’t know for sure how that plays out for some time.Currently, however, a kerfuffle over who runs the agency in the interim is also being sorted out in a courtroom. Richard Cordray, director of the CFPB until he stepped down last week, appointed Leandra English as the acting director until President Trump named a permanent director. Trump, in relying upon the advice of legal counsel, appointed OMB Director Mick Mulvaney as the acting director. Both Mulvaney and English showed up for work on Monday, convinced they were the boss.English took it a step further and filed a lawsuit against the Trump administration saying the president didn’t have the authority under Dodd-Frank to appoint an acting director. This is where it all gets sticky and where people have different interpretations of the law.The Dodd-Frank law says the director can appoint an acting director in cases of “absence” and “unavailability.” The Trump administration says once Cordray resigned, the position became “vacant” and therefore, the Federal Vacancies Reform Act of 1998 applies, allowing President Trump to name the acting director.If Cordray remained as director and planned a trip with "marine biologist" George Costanza to visit the Galapagos Islands to swim with the turtles for six months, that would certainly qualify as an “absence.” If Cordray were going into the hospital for surgery that required an extended stay, that would trigger the “unavailability” language.Cordray resigned. That makes the position vacant. Trump and his team are right that he has the authority to name the acting director.English’s lawsuit, likely pushed by Democratic Sen. Elizabeth Warren of Massachusetts, has an unexpected foe: CFPB general counsel Mary McLeod. She agrees with Trump:In a memorandum obtained by POLITICO, CFPB general counsel Mary McLeod said Trump had the legal authority to name an acting director to the bureau under the Federal Vacancies Reform Act."It is my legal opinion that the president possesses the authority to designate an acting director for the bureau," McLeod wrote in the Nov. 25 memo to the CFPB leadership team. "I advise all bureau personnel to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB."Trump is right not just because he says so. In this case, it appears he has the law on his side.What's your view?Got an opinion about this issue? Send a letter to the editor, and you just might get published.  Continue reading...

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