by Jeff Sovern
First, in case anyone who reads this blog doesn't already know, yesterday, CFPB Director Richard Cordray appointed CFPB chief of staff, Leandra English, to become CFPB deputy director. Section 1011(b)(5)(B) of the Dodd-Frank Act provides that the deputy director shall "serve as acting Director in the absence or unavailability of the Director." Mr. Cordray then resigned, seemingly making Ms. English the acting director. But within hours, the White House proclaimed that it would appoint Office of Management and Budget Director Mick Mulvaney to run the agency, pending confirmation of an as-yet unnamed permanent director. The president presumably claims that authority under the Federal Vacancies Act. But as Georgetown's Adam Levitin has demonstrated, Dodd-Frank's drafters rejected that idea. As Alan Kaplinsky and others have noted, the dueling claims will surely lead to litigation over which one is the director.
In the meantime, any action either purported leader takes on behalf of the CFPB will be subject to challenge by anyone who has standing, and perhaps set aside. That will undoubtedly affect the willingness of CFPB employees to act in a variety of ways, as well as those who are regulated by the CFPB. The result will be uncertainty for consumer financial businesses.
We often hear that the industry is deeply troubled by uncertainty. Consequently, the industry should loathe this fight and should seek an early resolution. If the industry supports Ms. English and presses the Trump administration to walk back its appointment of Mr. Mulvaney, the administration, facing a united front from both consumer advocates and the industry, will probably accept Ms. English as the acting head. Uncertainty will dissipate. In contrast, consumer advocates, who would surely prefer uncertainty to the appointment of a director who opposes the Bureau's mission and sees it as a a “joke . . . in a sick, sad way,” have no incentive to accede to the appointment of Mr. Mulvaney. In short, the industry should band together with consumer advocates and throw in the towel on this one. If they don't, it will give the lie to their claims of the problems with uncertainty.