A momentous legal battle is brewing over the Consumer Financial Protection Bureau, a largely independent-of-government “watchdog” agency with incredible autonomous and wide-ranging powers that was created during former President Barack Obama’s administration.
At issue is whether President Trump has the right to appoint a new director to head the agency after the Obama-appointed director, Richard Cordray, abruptly resigned Friday and named his deputy, Leandra English, as acting director, according to Bloomberg.
English has filed a lawsuit in federal court asking for the temporary replacement named by Trump, budget director Mick Mulvaney, to be blocked so that she can assume leadership of the powerful financial sector regulatory agency. The agency can issue rules and levy fines that are not subject to any sort of oversight or accountability from either Congress or the executive branch.
The bureau was created out of the 2010 Dodd-Frank Act that strictly regulated the banking industry and was the brainchild of Massachusetts Democrat Sen. Elizabeth Warren, who initially sought to run it herself. By design, it was created to exist outside of the federal government structure, and the statutes that created it state that the deputy director is to take over “in the absence or unavailability” of the director.
But the position isn’t open because the previous director is absent or unavailable, but is vacant because he resigned. This means Trump has the authority to name a new director as per the Federal Vacancies Reform Act, according to legal counsel from the White House and Justice Department.
Even legal counsel at the CFPB appear to agree that Trump has the authority to appoint a new acting and permanent director, according to Reuters, leaving English to fight this impending legal battle by herself with private attorneys.
That decision by CFPB General Counsel Mary McLeod was most likely influenced by the fact that a federal court ruled in October of 2016 that the agency as structured was unconstitutional, and required reforms that would allow at least some oversight by the Executive branch or Congress into their activity and command structure, according to Forbes.
The court didn’t like the fact that the agency was run by a single “untouchable” director, and insisted that if the bureau wanted to be a constitutionally-protected watchdog “independent” of government, it must be run by a group of appointed people in a board or commission.
The Obama administration attempted to appeal that ruling from the D.C. Court of Appeals on its way out the door, but the Trump administration dropped the challenge in March and agreed with the court that the agency needed to be reined in. That move could very well have been a large part of Cordray’s decision to abruptly resign well before his term was to expire.
Unsurprisingly, Sen. Warren’s head has been about to explode all weekend. She posted a series of tweets that defended the regulatory agency she helped create and attacked the Trump administration and the named acting director, Mulvaney, according to The Hill.
Mulvaney has long been on record as opposing the CFPB from the very start, even calling it a “sick, sad joke.”
According to the Washington Examiner, Mulvaney will serve temporarily as the acting director of the CFPB until a permanent director appointed by Trump can be confirmed by the Senate.
Meanwhile, as per the requirements of the Federal Vacancies Reform Act, he will continue to serve in his confirmed position as Director of the Office of Management and Budget.
It is expected that Mulvaney will take steps to reform the CFPB in the duration that would make it more friendly to banks and financial institutions, in essence getting out of their way so they can take part in growing the economy instead of hampering them with increasingly strict regulations and hefty fines.
As with many of the other battles the left has picked with Trump, the president will ultimately win this one, and a once “untouchable” and powerful independent regulatory agency prized by Obama and Warren will be brought to heel.
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