2017-11-25 16:16:02
Who Will Be in Charge on Monday? That’s the Question in Agency Battle

Come Monday morning, who will be running the Consumer Financial Protection Bureau? Over the weekend, the answer wasn’t clear.

Trump administration officials on Saturday defended the president’s legal authority to name his budget director as the acting head of the independent watchdog agency. President Trump made the appointment late on Friday, after the abrupt resignation of Richard Cordray, the agency’s director.

Mr. Trump’s announcement was intended to thwart a move by Mr. Cordray earlier in the day to elevate an official from inside the agency to take on temporary leadership of the bureau.

Now, both sides say the law is in their favor, setting up a clash that may well end up in court.

Two White House officials, speaking to reporters in a briefing call on Saturday, cited guidance from the Office of Legal Counsel, part of the Justice Department, as legal grounds for Mr. Trump’s move to install Mr. Mulvaney as the consumer agency’s interim leader until a permanent successor is confirmed by Congress.

The officials cited the federal Vacancies Reform Act as giving Mr. Trump the authority to override the successor named by Mr. Cordray, who resigned about a week earlier than expected. Mr. Cordray followed up his resignation announcement with a letter naming the agency’s chief of staff as acting chief.

Mr. Trump’s decision shortly afterward to name his own temporary director was a “typical routine move,” said one official, who spoke on the condition of anonymity.

Mr. Mulvaney is a fiscal hawk who previously called the agency a “sad, sick joke” and once, as a member of the House, sponsored legislation to end its existence.

A formal opinion from the Office of Legal Counsel was expected to be released soon, the officials said. In two past opinions, issued in 2003 and 2007, the office had argued that the president has the authority to use the Vacancies Act to override an agency’s designated succession path.

“We have gone out of our way to avoid any unnecessary legal battle with Mr. Cordray,” the administration official said. “His actions clearly indicate he is trying to provoke one.”

Mr. Cordray had been expected to resign at the end of the month. Instead, in the middle of a holiday weekend, he said he was leaving and named Leandra English, the agency’s chief of staff, as deputy director.

Under the 2010 Dodd-Frank Act, which established the consumer bureau, the deputy director serves as the agency’s acting head in the absence of permanent leadership. Mr. Cordray, citing that act, said he expected Ms. English to take over from him.

Democrats, who fought for the bureau’s creation and championed its work as a valuable defense against predatory companies and abusive financial practices, are likely to push for a legal challenge to Mr. Trump’s move.

Senator Elizabeth Warren, Democrat of Massachusetts, who proposed the consumer bureau and helped set it up, said Mr. Trump’s move was legally impermissible.

“The Dodd-Frank Act is clear: If there is a CFPB director vacancy, the deputy director becomes acting director,” she wrote on Facebook. “President Trump can’t override that.”

Some legal experts say there is merit to question whether the Vacancies Reform Act supersedes an individual agency’s designated line of succession.

“No court has addressed this legal question,” said Aditya Bamzai, a law professor at the University of Virginia. “Any Office of Legal Counsel, in any administration, would have given the same answer with respect to this issue. But if we see a legal challenge, the executive branch’s positions don’t always prevail in court.”

Stephen I. Vladeck, a law professor at the University of Texas, says it’s an “open question” which act — the vacancies law or Dodd-Frank — should prevail, especially because Dodd-Frank was enacted more recently.

At stake are two different views on how the bureau should be run. As President Trump and his administration work to loosen regulations on businesses, the consumer bureau has been a prominent holdout. It is still carrying out the agenda it developed under President Barack Obama, issuing new rules — like a recent regulation intended to sharply curtail the payday lending market — and sanctioning financial companies for practices that it considers unfair or abusive.

The agency was established six years ago, and it has unusually broad power to combat abuses in a wide variety of financial products, including mortgages, credit cards, bank accounts and student loans. But the agency has long been vilified by Republicans as an overreaching, aggressive government arm.

The appointment of Ms. English to the deputy director position was seen as an attempt to delay Mr. Trump from appointing his own interim director. Confirming a permanent director could take months. Mr. Cordray’s confirmation was delayed for two years by Republicans and the banking industry, two parties that objected to the agency’s creation and sought to limit the attempt at federal oversight.

Mr. Mulvaney will shoulder his new acting leadership on top of his role as director of the Office of Management and Budget. It is unclear how he will manage both roles, and the officials directed all questions about the mechanics of the situation to Mr. Mulvaney.

“We think he’ll show up Monday, go into the office and start working,” an administration official said of Mr. Mulvaney’s plans.

But it may not be that simple. The next move lies with Ms. English: She will need to decide whether to legally challenge Mr. Mulvaney for the bureau’s leadership, or defer to him.

“It’s a very awkward legal scenario if they both show up literally at the same office,” said Andy Grewal, a law professor at the University of Iowa. “It seems like both sides are trying to engage in gamesmanship here.”