December 1, 2017

Legal Battle of CFPB Directorship Still Looming, but Mulvaney Is the Acting Director in the Interim

3 min

Richard Cordray, the director of the CFPB since 2013, resigned at the end of the day on Friday, November 24, 2017, a week earlier than expected. That same day, Cordray also appointed Leandra English, the CFPB's chief of staff, to serve as the agency's deputy director. David Silberman, the previous acting deputy director, returned to lead the Research, Markets, and Regulations Division. (The only politically appointed post at the Bureau is the director of the agency.) Hours after Mr. Cordray's announcement, the White House appointed Mick Mulvaney, the director of the Office of Management and Budget, acting director of the CFPB. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (CFPA) states that the deputy director "shall serve as acting Director in the absence or unavailability of the Director," codified at 12 U.S.C. § 5491 (b)(5)(B).

The issue is whether this provision can be interpreted consistently with the Federal Vacancies Reform Act (FVRA), which generally allows the President to appoint an official to serve in an acting capacity – specifically, whether the exclusivity provision of the FVRA, 5 U.S.C. § 3347, and the CFPA preclude a vacancy appointment by expressly "designat[ing] an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity."

Late Sunday evening, Leandra English filed an emergency Temporary Restraining Order and Civil Complaint seeking to stop the Trump administration from appointing Mr. Mulvaney as the acting director and seeking a declaratory judgment that she is the proper acting director. In large part, her suit relies on the above-cited provision of the CFPA. Of note: The CFPB General Counsel's Office (a/k/a the Legal Division) signed onto the DOJ's opposition brief as "of counsel," noting that Mulvaney is the lawful acting director.

After two separate hearings on the TRO, on Tuesday, November 28, 2017, U.S. District Court Judge Kelly denied the TRO, noting, among other things, that Ms. English is not likely to prevail on the merits or suffer irreparable harm. This decided the emergency relief request; however, the lawsuit is still pending. The controversy over the CFPB's leadership comes as the Bureau faces challenges on legislative and judicial fronts, with congressional opposition to CFPB rulemaking under the Congressional Review Act, and a pending decision regarding the CFPB's constitutionality in the D.C. Circuit. Mulvaney, in his limited time as the acting director, has already implemented a freeze on hiring and on the issuance of any new regulations. The CFPB has had many "firsts" since it was created, and the resignation of its first director and his successor adds to that list. We will be following closely how it handles its first change in leadership and how this impacts the CFPB's priorities in the coming year.