On Friday, November 24, Richard Cordray left the CFPB — but not before appointing his Chief of Staff, Leandra English, as Deputy Director of the Bureau. Under the Dodd-Frank Act, the Deputy Director “shall . . . serve as acting Director in the absence or unavailability of the Director.”
Hours later, President Trump named Mick Mulvaney, current director of the Office of Management and Budget and a staunch CFPB critic, as Acting Director of the CFPB. The administration later released an Opinion of the Department of Justice’s Office of Legal Counsel (“OLC”) that seeks to harmonize the Dodd-Frank Act with the Vacancies Reform Act, which generally governs the President’s authority to make appointments to fill vacancies in federal agencies.
In brief, the OLC has advised that the President has the option of allowing the Deputy Director to serve as Acting Director — but also may choose (as President Trump has already done) to appoint a different Senate-confirmed appointee to serve as Acting Director. In its Opinion, the OLC takes pains to demonstrate that it has consistently viewed the Vacancies Reform Act as providing such an option even in the face of statutory language on succession.
Shortly thereafter, CFPB General Counsel Mary McLeod circulated a memorandum to the CFPB’s senior leadership taking the same position and advising “all Bureau personnel to act consistently with the understanding that Director Mulvaney is the Acting Director of the CFPB.”
Nevertheless, Deputy Director English sued President Trump and OMB Director Mulvaney late on Sunday, arguing that she is the rightful Acting Director of the CFPB and seeking declaratory judgment and a Temporary Restraining Order to prevent them from taking further action toward placing Mulvaney in charge of the agency.
Where does this leave us? Although the lawsuit is a wild card, it still appears the administration holds the upper hand.
- First, it is difficult to see how Deputy Director English obtains an injunction, as a court could reasonably have doubts about both her likelihood of success on the merits, and her claim of irreparable harm (since she may not have a cognizable legal interest in running the agency). Injunctive relief is essential here, however, as by the time such a suit is heard on the merits, there may be a Senate-confirmed Director in place.
- Second, the OLC Opinion notes that the President may always fire an Acting Director. The OLC reasons that even if the Dodd-Frank Act properly requires “good cause” for the President to remove a Director — an issue being litigated in the pending CFPB v. PHH case — such protection does not extend to an Acting Director.
- Third, it is difficult to see how the Bureau could take any action under Acting Director English — such as issuing a new proposed regulation or bringing an enforcement action — that would not be drawn into a legal fight over the legitimacy of the Acting Director’s authority. The same could be said of actions taken by Acting Director Mulvaney — but his actions are far more likely to be ratified by the next Director.
In light of the foregoing, it still appears that the Mulvaney era at the Bureau will begin Monday, to be followed by a full five-year term for a new Director once she or he is confirmed by the Senate.