Last November, Consumer Financial Protection Bureau Director Richard Cordray resigned to run for governor of Ohio. Unlike most agency heads, who serve at the pleasure of the president, Cordray served a five-year term that was set to expire in mid-2018; while he was in charge, the CFPB remained a bulwark of earnest regulation against a sea of Trumpism. But after Cordray left, Trump installed Mick Mulvaney, the White House budget director who once described the CFPB as a “joke . . . in a sick, sad way” as the temporary head of the agency.
Though there is some legal uncertainty regarding whether Mulvaney was properly appointed to fill this role, Mulvaney is currently calling the shots within the CFPB. And one of his first decisions appears to be publicly distancing his the Consumer Financial Protection Bureau from its mission of protecting consumers.
When federal agencies send press releases, they often include a stock paragraph at the end of the release explaining the purpose of the agency and what it does. Under Cordray, the CFPB described its mission as follows:
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.
With Mulvaney at the helm, however, the agency has added a few notable words to its description of its own mission (a change that ThinkProgress first noticed thanks to a tweet by Georgetown law professor Adam Levitin):
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.
It is emphatically not the mission of the CFPB to regularly identify and address “outdated, unnecessary, or unduly burdensome regulations.” To the contrary, the agency exists because Congress determined that there was far too little regulation of the financial sector.
The idea of a consumer financial protection agency was first proposed by Sen. Elizabeth Warren (D-MA). In a 2007 article published by the liberal journal Democracy, then-Professor Warren warned that financial firms face far fewer legal restrictions than manufacturers of physical products, and for no good reason.
“It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house,” Warren wrote, “But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street — and the mortgage won’t even carry a disclosure of that fact to the homeowner.”
The solution, according to Warren, was more regulation. “Just as the Consumer Product Safety Commission (CPSC) protects buyers of goods and supports a competitive market,” the future senator argued, “we need the same for consumers of financial products–a new regulatory regime, and even a new regulatory body, to protect consumers who use credit cards, home mortgages, car loans, and a host of other products.”
Congress agreed with Warren. The law creating the Consumer Financial Protection Bureau is called the “Consumer Financial Protection Act of 2010,” packaged within a larger bill called the “Dodd-Frank Wall Street Reform and Consumer Protection Act” and signed into law by President Obama.
That law provides that the CFPB “shall regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws” — making it clear that the purpose of the CFPB is to protect consumers through regulation, not to seek out and destroy regulations that the Trump administration deems “outdated, unnecessary, or unduly burdensome.”
Again, there is some uncertainty about whether Mulvaney is lawfully permitted to direct the CFPB at all. On his way out the door, Cordray appointed his former chief of staff, Leandra English, as the agency’s deputy director. The Consumer Financial Protection Act provides that English shall “serve as acting Director in the absence or unavailability of the Director.”
Trump, meanwhile, appointed Mulvaney pursuant to a different statute that allows him to temporarily appoint other senate-confirmed officials to fill vacancies that arise when agency leaders resign.
A pending lawsuit seeks to resolve the conflict between these two statutes. For the moment, however, that case is being heard by a Trump-appointed judge who appears inclined to back Trump’s play. Judge Timothy Kelly denied English’s request for a temporary order declaring her the agency’s proper leader last November.
Though it is possible that a higher court will ultimately disagree with Kelly, time is on Trump’s side. Even if the courts eventually decide that English, and not Mulvaney, is the CFPB’s lawful acting director, Trump can still fill Cordray’s job by nominating a replacement who is confirmed by the Senate.