Consumer watchdog agency's future uncertain amid leadership fight
CLOSE
Richard Cordray, director of the Consumer Financial Protection Bureau, talks about mortgage protections, managing student loans and the best ways to prevent another financial crisis with USA TODAY Editorial Page writer Saundra Torry.
The simmering battle for control of the U.S. Consumer Financial Protection Bureau exploded over the Thanksgiving holiday weekend amid clashing leadership succession strategies by the Trump administration and the watchdog’s newly departed director.
The moves left the consumer bureau with competing appointees named as its acting director and appeared to set the stage for an expanded struggle over an agency widely criticized by the financial industry and Washington conservatives but lauded by consumer advocates.
Richard Cordray, the Obama appointee who served as the bureau’s first director, launched the new battle late Friday by formalizing his previously announced plan to step down. In a letter to President Trump, Cordray highlighted the bureau’s record of returning nearly $12 billion to consumers “cheated or mistreated by banks or other large financial companies.”
While Cordray’s letter to Trump said his resignation would take effect at midnight Friday, it said nothing about a succession plan.
However, in a separate email to staffers of the consumer bureau, Cordray announced he reassigned Leandra English, the agency’s chief of staff, as deputy director. Under the Dodd-Frank Wall Street reform act that created the bureau in the wake of the national financial crisis, the appointment would make English the new acting director, Cordray wrote.
The move “would minimize operational disruption and provide for a smooth transition given her operational expertise,” Cordray wrote, referring to English.
Left unsaid was that the 11th-hour installation of English seemed aimed at blocking Trump from gaining control over the consumer agency until he nominated a successor and the nominee won Senate confirmation — a process that could take months.
Knowing that, Trump later Friday moved to circumvent Cordray’s succession plan. The White House announced that Mick Mulvaney, director of the Office of Management and Budget, would simultaneously serve as acting director of the consumer bureau “until a permanent director is nominated and confirmed.”
“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,” the White House announcement said.
The dueling appointments leave it unclear who will be in charge of the agency come Monday morning.
More: Consumer Financial Protection Bureau structure ruled unconstitutional
Court agrees to reconsider constitutionality of consumer agency’s structure
Senate overturns new rule allowing class-action suits against banks
Arbitration vs. class action: What consumers should know about the differences
Under Cordray, a potential Democratic candidate for Ohio governor in 2018, the consumer agency imposed new federal regulations and oversight on banks, credit card issuers, payday lenders and other financial service providers.
The actions alternately drew praise from consumer advocates and criticism from Capitol Hill conservatives and others who said the watchdog had overstepped its legal authority. Additionally, the agency has faced a constitutional challenge over its single-director leadership structure and absence of congressional oversight of its budget. Â
CLOSE
The Chamber of Commerce, the largest lobbying group in Washington by far, has filed a lawsuit against the Consumer Financial Protection Bureau to stop customers from filing class action lawsuits. Jose Sepulveda (@josesepulvedatv) has more.
Buzz60
English, who served in a series of executive posts at the consumer bureau, is viewed as a trusted Cordray ally who would continue the watchdog’s record as a strong financial regulator.
Mulvaney, a Republican who previously served as a House representative from South Carolina, is expected to chart a more restrained oversight role for the consumer bureau. He once referred to the agency as a “sad, sick joke,” a characterization he explained when asked about it during his January confirmation hearing for the federal budget director post.
“It is, to me sir, one of the most offensive concepts I think, in a representative government, which is almost completely unaccountable government bureaucracy,” Mulvaney said in response to questions from Sen. Jeff Merkley, D-Ore. “Because they are awful appropriations, because we don’t budget for them, because they’re run by essentially a one person dictator who believes he can’t even be fired by the president.”Â
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc