- The battle over the Consumer Financial Protection Bureau (CFPB) came to a head recently with congressional hearings and oral arguments in a court battle over the agency’s leadership.
- Mick Mulvaney, the White House budget director and acting head of the CFPB, defended his alleged “gutting” of the bureau in his first public face-off with the agency’s creator, Sen. Elizabeth Warren.
- Meanwhile, a senior official at the CFPB whom the former director named as his successor, challenged the legality of Mulvaney’s interim leadership in a federal appeals court.
The battle over the Consumer Financial Protection Bureau (CFPB) came to a head last week as its controversial director, Mick Mulvaney, faced congressional questioning and the legal battle over his leadership played out in a Washington, DC courtroom.
Mulvaney has held two jobs – as the director of the Office of Management and Budget and as the interim head of the bureau he once called a “sick, sad joke” – ever since the president installed him as the CFPB’s acting director following the previous director’s resignation in late November.
His leadership of the bureau has been marked by a protracted fight over the legality of his appointment and a clash between Mulvaney’s team and supporters of the agency, who say he is determined to gut its mission.
When former CFPB director Richard Cordray stepped down last fall, Cordray named his chief of staff, Leandra English, to succeed him as acting director until the Senate confirmed a new leader of the bureau appointed by President Donald Trump.
After Trump appointed Mulvaney to take over the agency as its interim head, English sued Trump. A federal judge denied English’s requests to remove Mulvaney and empower her, but English appealed the case to the DC appeals court.
English and her supporters argue that the 2010 Dodd-Frank Wall Street reform legislation, which birthed the CFPB, explicitly states that the deputy director of the agency will “serve as acting director in the absence or unavailability of the director.”
The administration is arguing that the 1998 Federal Vacancies Reform Act supersedes the statute and gives the president the authority to appoint a Senate-confirmed official to the role.
The Dodd-Frank writers themselves, former Rep. Barney Frank and former Sen. Christopher Dodd, signed on to one of five amicus briefs supporting English’s position. They argue that they specifically intended that the deputy director assume control of the agency before a new head is nominated by the president and confirmed by the Senate in order to insulate the agency from politics.
English and her supporters also argue that appointing a White House official, who answers directly to the president, politicizes the agency.
“It completely diminishes or destroys the independence that agency was supposed to have,” Ira Rheingold, the general counsel of the National Association of Consumer Advocates, told Business Insider.
The president has not indicated that he’ll nominate a permanent director of the agency anytime soon.
‘You’re hurting real people to score cheap political points’
On Wednesday and Thursday, Mulvaney presented a semiannual report on the CFPB before House and Senate committees – the first opportunity for Democrats to publicly question him since he took over the agency.
Over the last four months, Mulvaney has worked quickly to halt and reverse the agency’s work.
Zero enforcement actions have been taken under Mulvaney’s leadership, according to an Associated Press report. (The AP also reported recently that Mulvaney, a self-described fiscal hawk, gave significant pay raises to several top CFPB staffers he brought with him to lead the agency, including some who occupied positions that did not exist under the previous administration.)
Eighteen attorneys general, all Democrats, filed their own amicus brief in support of English. Maryland Attorney General Brian Frosh said the CFPB has “essentially dropped out” of many cases and investigations the state had undertaken in partnership with the agency since Mulvaney took over.
“Mulvaney, like Scott Pruitt, doesn’t believe in the mission of his agency and it looks to me like he’s trying to shut it down, not protect consumers as is the charge of the agency,” Frosh told Business Insider.
Consumer advocates argue that Mulvaney, who has called the CFPB “the very definition of tyranny,” was specifically selected for his aggressive opposition to the bureau.
“Mulvaney is in there for one purpose and one purpose only and that’s to destroy the mission of that agency,” Rheingold said.
Mulvaney’s congressional questioning illustrated the ongoing bitter debate between lawmakers over the role of the bureau, which was the brainchild of Sen. Elizabeth Warren, the Massachusetts Democrat.
“You’ve taken obvious joy in talking about how the agency will help banks a lot more than it will help consumers and how upset this must make me. But here’s what you don’t get, Mr. Mulvaney: This isn’t about me,” Warren said. “You’re hurting real people to score cheap political points.”
Just seconds later, the floor was turned over to Republican Sen. Tom Cotton, who opened his questioning by asking Mulvaney, “How does it feel to lead an unconstitutional agency?”
During oral arguments in the US Court of Appeals for the DC Circuit last week, two judges on the three-judge panel hearing English’s case suggested they were uncomfortable with Mulvaney serving both in his White House role as as director of the CFPB.
“Mr. Mulvaney’s appointment undermines the Bureau’s independence, threatens its important mission to protect consumers, and circumvents the Senate confirmation process,” English’s attorney, Deepak Gupta, said in a statement.
Mulvaney’s critics argue that he’s “gutting” one of the only government agencies that has effectively protected consumers from predatory practices of financial institutions, including mortgage and credit card companies, in the years since the 2008 crash. (The agency has returned about $US12 billion to 29 million consumers since opening in 2011.)
“Nobody voted for Trump because he was going to gut consumer protections and protect the banks,” Rheingold said.
But Mulvaney argues that the agency wields far too much unchecked power and that its actions should be congressionally-approved.
“The CFPB is one of the most – if not the most – powerful federal agencies in existence. It is also the least transparent or accountable,” Mulvaney wrote in a recent op-ed defending his tenure. “As director, I have almost total control over regulations and access to virtually unlimited funds. In some cases I am even judge, jury and executioner. I do not answer to Congress, to the people I regulate, or even to you.”
Mulvaney says he’s empowered to radically reshape the agency because of the power he’s afforded as director of what he describes as a rogue agency.
“It’s not accountable to you. It’s not accountable to the public. It’s not accountable to anybody but itself,” Mulvaney told the House Financial Services Committee on Wednesday, adding that the agency’s new goal is “to recognise free markets and consumer choice” and take “a humble approach to enforcing the law.”