Donald Trump on Saturday called the Consumer Financial Protection Bureau (CFPB), which has been left with two competing acting directors after the resignation of an Obama appointee, “a total disaster”.
Richard Cordray had until Friday been director of the CFPB since its inception after the 2008 financial crash. The agency is meant to protect US consumers from bad practice by banks, credit card, student loan and mortgage companies, debt collectors and payday lenders.
Cordray used the agency’s mandate aggressively, which often made him a target for banking lobbyists and Republicans in Congress who believed he was overreaching.
Submitting his resignation on Friday, he named Leandra English, the agency’s chief of staff, as deputy director. Under the Dodd-Frank Act that created the CFPB, English would thus become acting director. Cordray, a Democrat, cited the law when he promoted his longtime ally.
Trump however countered by naming Mick Mulvaney, currently director of the Office of Management and Budget, as his pick for the acting role. Mulvaney is a long-time critic of the CFPB and has wanted its authority significantly curtailed.
On Saturday senior Trump administration officials cited the Federal Vacancies Reform Act (FVRA) of 1998 when they told reporters they expected no trouble when Mulvaney shows up for work on Monday.
Speaking on condition of anonymity, the officials said Trump’s appointment was a “routine move”. One said Cordray’s move was designed to provoke a legal battle.
“The Vacancy Act is long-established,” an official said, “used by presidents of both parties as a routine function, and we believe this act is consistent with that long-established practice.”
A little before 5pm, Trump duly issued a pair of tweets. The CFPB, he wrote, “has been a total disaster as run by the previous administrations [sic] pick. Financial institutions have been devastated and unable to properly serve the public. We will bring it back to life!”
He added: “Check out the recent editorial in the Wall Street Journal … about what a complete disaster the [CFPB] has been under its leader from previous administration, who just quit!”
The director of the CFPB requires confirmation by the Senate, a process that can take weeks or months to complete. Cordray’s move was an attempt to let his favored successor run the agency for as long as possible.
The Massachusetts Democratic senator Elizabeth Warren, a driving force behind the establishment of the CFPB before she entered Congress, tweeted on Friday that Trump “can nominate the next CFPB director – but until that nominee is confirmed by the Senate, Leandra English is the acting director under the Dodd-Frank Act.”
On Saturday afternoon, she added: “By ignoring Dodd-Frank & naming his own acting CFPB director, [Trump] is causing chaos & market uncertainty. So I agree with Rich Cordray: this needs to be decided in the courts.
“If [Trump] believes he is acting legally by ignoring Dodd-Frank, he should go to court & seek a judgment right away to settle this … dispute.”
Earlier Maxine Waters of California, the top Democrat on the House financial services committee and a prominent critic of Trump, said Mulvaney was an “unacceptable” choice to lead the CFPB because of his “noxious” views towards its mission to protect consumers.
“As a member of the House financial services committee, Mr Mulvaney called the Consumer Bureau a ‘joke’,” Waters said in a statement. “He was also the original co-sponsor of a bill to completely eliminate the Consumer Bureau, and supported other legislation to harmfully roll back Wall Street reform.”
At the CFPB, Cordray was able to extract billions of dollars in settlements from banks, debt collectors and other companies. When Wells Fargo was found to have opened millions of phoney accounts for its customers, the CFPB fined the bank $185m, the agency’s largest penalty to date.
Cordray announced earlier in November that he would resign by the end of the month. There is speculation that he will run for governor in his home state, Ohio.
