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CFPB Deputy Director Sued Donald Trump Over Mulvaney Appointment

The Consumer Financial Protection Bureau’s deputy director, late Sunday evening, sued Donald Trump to block President from replacing her as acting director of the federal consumer finance watchdog with Mick Mulvaney.

Leandra English, who was named deputy director Friday shortly before Director Richard Cordray resigned his position, asked the federal court in Washington to prevent Trump from installing Office of Management and Budget Director Mulvaney as the bureau’s acting director.

The CFPB’s deputy director said in the complaint that Trump wrongly relied on the Federal Vacancies Reform Act to appoint Mulvaney as the acting CFPB director. Instead, the 2010 Dodd-Frank Act, which created the bureau, established a clear line of succession that calls for the CFPB’s deputy director to serve as the acting director when there is a vacancy atop the bureau, English argued.

“The president’s interpretation of the FVRA cannot be reconciled with Dodd-Frank’s mandatory language. Where the two statutes conflict, Dodd-Frank controls as the later-enacted, more specific statute,” wrote English’s attorney, Deepak Gupta of Gupta Wessler PLLC, who is himself a former CFPB attorney.

English, a longtime CFPB official, filed the case in her capacity as a private citizen. She named both Trump and Mulvaney as defendants in the suit.

Before the weekend was out, debate was already raging over whether the president can override Cordray’s choice to lead the CFPB until a permanent director is confirmed by the Senate.

On Saturday, the Office of Legal Counsel, the Justice Department unit that provides advice to the executive branch, released a memo backing the president’s ability to use the FVRA to appoint Mulvaney acting director.

While the memo acknowledged that Dodd-Frank had set up a method for putting an acting director in place, the OLC found that the federal vacancies law operated alongside the 2010 financial regulatory reform legislation. And in such instances, the president’s authority outweighs that of any mechanism set up by Dodd-Frank, the OLC said.

“And, as with other office-specific statutes, when the president designates an individual under the Vacancies Reform Act outside the ordinary order of succession, the president’s designation necessarily controls. Otherwise, the Vacancies Reform Act would not remain available as an actual alternative in instances where the office-specific statute identified an order of succession, contrary to Congress’s stated intent,” said the memo, which was signed by Assistant Attorney General Steven A. Stengel.

That argument was backed up by the CFPB’s own general counsel in a separate Saturday memo.

In the memo, CFPB General Counsel Mary McLeod said that she found the OLC’s argument that the FVRA should hold sway “on point and persuasive,” and that it answers the question of whether Mulvaney should be seen as the rightful acting CFPB director.

“This confirms my oral advice to the Senior Leadership Team that the answer is ‘yes.’ I advise all bureau personnel to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB,” McLeod wrote in the memo.

But English rejected that argument and claimed that the president could not appoint the leader of an executive branch agency who retains his title as OMB director to lead the CFPB, which is an independent agency. In his role as acting CFPB director, Mulvaney would also sit on the board of the Federal Deposit Insurance Corp. as well as the Financial Stability Oversight Council, a panel of regulators created by Dodd-Frank.

“The president may not, consistent with the statutory requirement of independence, install a still-serving White House staffer as the acting head of an independent agency — particularly when doing so would displace an acting head who has a clear legal entitlement to the position,” the complaint said.

As the legal fight between the CFPB and the White House plays out, the question of how the bureau will function with two people claiming the right to serve as acting director remains unanswered.

Senior White House officials on Saturday said they expected English to show up to work on Monday to serve under Mulvaney. English, by dint of her lawsuit, is looking to keep Mulvaney from showing up to work at the CFPB on Monday.

The case has not yet been assigned to a judge at the D.C. District Court, so English’s bid to block Mulvaney’s appointment may not be heard before the CFPB’s doors open on Monday.

And all that means that the confusion at the CFPB that began Friday will continue on Monday.

The White House could not be reached for comment Sunday night.

English is represented by Deepak Gupta, Matthew W.H. Wessler and Daniel Townsend of Gupta Wessler PLLC.

The case is English v. Trump, case number 1:17-cv-02534, in the U.S. District Court for the District of Columbia.

The above was first reported by Law360.

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