The battle for the country’s most powerful oversight agency has turned into all-out war

Former Deputy Director Leandra English and Trump's pick, Mick Mulvaney, are fighting to become the CFPB's next acting director.

Budget Director Mick Mulvaney testifies on Capitol Hill in Washington.(CREDIT: AP Photo/Jacquelyn Martin)
Budget Director Mick Mulvaney testifies on Capitol Hill in Washington.(CREDIT: AP Photo/Jacquelyn Martin)

Even a box of doughnuts couldn’t stem the drama.

On Monday, the Consumer Financial Protection Bureau (CFPB) found itself in the middle of a bizarre back and forth between Acting Director Leandra English — handpicked by outgoing chief Richard Cordray — and President Trump’s chosen CFPB successor, Mick Mulvaney, who arrived at the agency carrying what appeared to be boxes of Dunkin’ Donuts, presumably for his new “staffers.”

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An hour later, New York Times reporter Katie Rogers posted a photo of a staff-wide email English had sent approximately 30 minutes after Mulvaney’s arrival, in which English stated that she was grateful for their service and was signed, “Leandra English, Acting Director.”

For all intents and purposes, the CFPB now had two acting directors — both embroiled in a messy battle for the agency’s top spot.

The controversy first began on Friday, when Cordray appointed English, former deputy director and a longtime civil servant who “joined the agency in its infancy and rose steadily through its ranks,” according to the Times, as acting director. The decision followed Cordray’s abrupt resignation announcement that same day (the outgoing director had eight months left in his tenure at the time of his departure). It’s been speculated that Cordray is seeking to run in the 2018 Ohio gubernatorial race.

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In a letter, Cordray wrote that appointing English as acting director would help “minimize operational disruption and provide for a smooth transition.” In a staff-wide memo, he added that it had been the “joy of [his] life” to “serve our country as the first director of the Consumer Bureau by working alongside” CFPB staffers.

“Together we have made a real and lasting difference that has improved people’s lives,” he said, remarking on his time at the agency, which is charged with overseeing consumer financial rights (specifically in terms of student loans, credit cards, mortgages, and banking institutions) and monitoring Wall Street, and was created following the 2008 financial crisis.

That same day, Trump appointed his own acting director, Mulvaney — the current Office of Management and Budget (OMB) director. The White House issued a statement hours after Cordray’s resignation that noted the president “looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities.”

It added that Mulvaney would “serve as Acting Director until a permanent director is nominated and confirmed.”

As the Washington Post noted, Cordray’s decision to appoint English was likely two-fold: It would have (or rather should have) blocked Trump from attempting to position a Republican — one who has publicly called the agency “sick, sad” and a “joke” — in one of the more powerful watchdog institutions, while also following the general line of succession, according to the Dodd-Frank financial protection law. That law, which first created the CFPB and was signed by President Obama in July 2010, stated that, “in the absence or unavailability of the director”, the deputy director automatically assumes the chief role.

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But some experts have since argued that the Dodd-Frank “unavailability” provision doesn’t apply to instances in which the former director has resigned — only in cases where the director is out of commission temporarily.

“That phrase could be interpreted to be about the director’s health, rather than the director’s retirement,” the Post wrote.

Rather than waiting for the courts to decide which interpretation of the rule is correct, however, both English and Mulvaney have gone on the offensive, with the former filing a lawsuit on Sunday evening to prevent Trump from appointing his pick to the agency’s lead role, citing the Dodd-Frank provision in its arguments.

“To ensure the Bureau’s independence, Congress specified that the Director would not serve at the pleasure of the President and could instead be removed only for cause,” the lawsuit adds. “Congress ensured that the President could not circumvent the need for Senate confirmation by naming a temporary replacement for a Director who leaves before the expiration of his or her term. Instead, Congress provided that the Bureau’s Deputy Director…shall ‘serve as acting Director in the absence or unavailability of the Director.'”

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In response, the White House Office of Legal Counsel has argued that the president has every right to appoint his own successor under the Federal Vacancies Reform Act. While the Dodd-Frank rule stands, assistant attorney general Steven Engel argued in an eight-page opinion on Sunday, it “does not displace the president’s authority under the Vacancies Reform Act”, instead giving Trump authority to “override an agency’s designated succession path” as he sees fit.

(As The Intercept’s David Dayen noted on Monday, Engel himself was previously “one of two lead counsels for NDG Financial Corp., a Canadian payday lender that CFPB cited for running a nine-year scheme to use its foreign status to offer U.S. customers high-cost loans that were at odds with state and federal law.”)

For its part, English’s lawsuit addresses the Federal Vacancies rule, arguing that “by its own terms, [it] does not apply where another statute ‘expressly…designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity–which is exactly what the Dodd-Frank Act does.”

“The President’s interpretation of the FVRA runs contrary to Dodd-Frank’s later-enacted, more specific, and mandatory text,” the lawsuit concludes.

The vitriolic legal battle between Trump’s CFPB pick and Cordray’s appointee has subsequently spilled over into the CFPB offices.

According to Reuters, on Monday, following English’s staff-wide email, Mulvaney issued his own fiery memo, claiming the top role for himself and instructing staffers to “disregard any instructions you receive from Ms. English in her presumed capacity as Acting Director. If you receive additional communications from her today…please inform the General Counsel.”

He added, “…Please stop by the 4th floor to say hello and grab a donut.”

No word yet on whether English got a donut.


UPDATE: During Monday’s White House press briefing, press secretary Sarah Huckabee Sanders stated that Mulvaney had “taken charge of [the CFPB]” and that he had the “full cooperation of the staff.” She added,

Things went very well over at his first day at CFPB. I think the legal outline shows very clearly who is in charge of that agency, and both he and the White House, as well as the general counsel for CFPB — who was appointed by [Richard Cordray] — said that he has the legal standing to be there and serve as the director. And we all agree with that, and again, feel very confident moving forward. … [Leandra English] is still the deputy director and has a legal standing in that capacity, but not as a director.