Earlier this month, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray announced he would be leaving the agency at the end of the month, rather than serving his full term that was set to expire in July 2018. On Friday, November 24, Director Cordray formally resigned, rather than waiting until November 30, and promoted CFPB Chief of Staff, Leandra English, to the position of acting Director.
With Cordray’s early departure announcement, the President appointed the Office of Management and Budget Director, Mick Mulvaney, to serve as acting Director until a full-time director is nominated by the President and confirmed by the Senate. This action prompted a legal challenge by English regarding whether the President has the authority to make such an appointment. Filed in the U.S. District Court for the District of Columbia, English – on behalf of herself, not the CFPB – sought a temporary restraining order (TRO) against the President appointing and Mulvaney serving as the acting Director, which the court denied on November 28.
The District Court’s denial of the TRO leaves Mulvaney in charge as acting Director of the CFPB until the President nominates a permanent director. As acting Director, Mulvaney has the authority to review and alter existing activity related to rulemakings and enforcement proceedings, which could be challenged under the Administrative Procedures Act depending on the action. On Monday, November 27, Mulvaney issued a 30-day freeze on agency hires and regulations.
It is expected that English will continue to fight, arguing the Dodd-Frank Act, which created the CFPB in 2010, states that the Deputy Director “shall…serve as the acting Director in the absence or unavailability of the Director.” (12 U.S.C. §5491(b)(5)(B)). The District Court rejected this claim, holding the President’s power under the Federal Vacancies Reform Act of 1998 (FVRA) allows for such appointments even with the Dodd-Frank Act language outlining succession. The CFPB’s general counsel agreed with this determination, arguing the FVRA is not made inapplicable due to the language included in Dodd-Frank. Rather, both statutes are an available means to fill a vacancy.
Other concerns raised relate to the agency’s constitutional issues being debated in PHH Corp. v. CFPB, where the accountability and oversight of the agency led by a single director is under scrutiny (in addition to an interpretation of the Real Estate Settlement Procedures Act). The decision in this case, pending before the U.S. Court of Appeals for the D.C. Circuit, is anticipated in the coming months. In the meantime, several members of Congress are pushing for agency restructure to a bipartisan commission, which NAR supports as it offers long-term policy stability and compliance certainty, which are vital to the housing economy.
Several individuals are rumored to be nominated to fill the director role, including George Mason University law professor Todd Zywicki, outgoing House Financial Services Committee Chair Jeb Hensarling (R-TX), and former acting Comptroller of the Currency, Keith Noreika. Stay tuned for updates on this developing situation.