Legal, Laws, and Regs

The CFPB Leadership Fight and Silver Linings


And the Judge ruled in favor of Mulvaney. None of us are surprised. English will, most likely, appeal the ruling. In the meantime, Texas has filed a motion requesting leave to filing a Friend of the Court.

These red state AGs have very little else to do.

First Update:

The judge has asked all parties to appear in court today at 4PM Eastern regarding the motion for a temporary restraining order. We’ll most likely get resolution on the two leader issue at that time.


I have updates on the lawsuit over the temporary leadership of the Consumer Financial Protection Bureau. Last night, a deputy Attorney General filed a legal motion opposing Leandra English’s request for a temporary restraining order. They did so quickly at the urging of the judge, newly installed, Trump-appointed Timothy Kelly.

The Judge is likely to rule today on the motion for the restraining order. Sadly, I don’t hold out a lot of hope that English will prevail.

OK, we’re disappointed. Now, let’s look at the silver lining.

Trump’s appointee for acting Directory, Mulvaney, has stated he’ll split his time between the two agencies: the OMB, of which he’s Director, and the CFPB. This will, of course, undermine agency enforcement actions, such as the one against Wells Fargo. However, it will also open the Trump administration up to lawsuits for the agency not fulfilling its Congressional-mandated duties.

In addition, it will slow up or even reverse the new rules and regulations that the CFPB has been releasing: governing everything from payday loans to debt collectors. At this time, this isn’t a bad thing. The reason why is while the Republicans still control Congress, and still have access to the Congressional Review Act (CRA), they’re likely to toss any new rule or regulation out that would have come from a more consumer-oriented leadership. They’ve already done so with a rule that would have made it easier for consumers to sue banks, such as Wells Fargo.

Not just toss out, either. Under the CRA, any rule or regulation disapproved by Congress can never be re-issued in its original form unless Congress passes legislation allowing it.

So, the CFPB never had a chance. If English wins the court claim and is installed as acting Director, Trump will immediately appoint a new head, and the person will most likely be installed before year end. In the meantime, any new rule or regulation she manages to get released will just get overturned by Congress using the CRA.

If Mulvaney prevails, Trump will leave him in the position as long as he can in order to maintain complete control over the agency. This makes anything Mulvaney does or doesn’t do that much more vulnerable to court action. It also adds to the growing chaos and dysfunction in the Trump administration, which Democrats will carefully note come Fall of 2018.

Consumers will lose in all of this, but we started losing the day Trump took over as President, and will continue to do so until he’s gone. Leadership of the CFPB won’t change this. The biggest loser in all of this, though, is Congress. Congress and it’s Republican leadership. Note that we haven’t heard from either Ryan or McConnell about Trump’s actions with Mulvaney. In fact, we’ve heard very little from most Republicans related to Trump’s actions.

Few things will bring about partisan cooperation more in Congress than Congressional action to create and hold as much legislative power as it can. There’s a constant tug-of-war between the Executive and Legislative branches. That’s the reason we have the Congressional Review Act. It’s also the reason why the CFPB was created as an ‘independent’ agency.

Trump’s appointment of Mulvaney, and the resultant legal action, undermine legislative reach. Both make it just a little more difficult for Congress to place legislative controls over the Executive branch in the future.

In addition, Mulvaney’s expected prohibitions against the release of CFPB rules that would have been overturned using the CRA anyway, means that once the Democrats have control we can pass the rules and ensure they’re permanently enshrined in the government’s regulatory apparatus.

And McConnell and Ryan have only themselves and their own party to blame.

Like I said: silver lining.


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