U.S. Senator Elizabeth Warren (D-MA) (L) talks with U.S. Consumer Financial Protection Bureau Director Richard Cordray (R) after he testified about Wall Street reform before a Senate Banking Committee hearing on Capitol Hill in Washington September 9, 2014.
Photo by Jonathan Ernst/Reuters

Trump creates crisis within key consumer-protection agency

Updated

Mick Mulvaney, Donald Trump’s right-wing budget director, hasn’t exactly been shy when giving his opinion about the Consumer Financial Protection Bureau. “I don’t like the fact that CFPB exists,” the South Carolina Republican said two years ago.

That was actually one of his milder condemnations. Mulvaney has also decried the consumer-protection agency as “a sad, sick joke,” which was right around the time he, during his congressional career, co-sponsored legislation to eliminate the CFPB altogether.

And yet, late on Friday – the day after Thanksgiving, when most of the country probably wasn’t paying close attention to political developments – Trump decided Mulvaney should take over as the new head of the Consumer Financial Protection Bureau. [Update: Richard Cordray, who stepped down from the CFPB last week, will be on tonight’s show.] Under the plan, Mulvaney would still lead the Office of Management and Budget, but at least for now, he’ll also oversee the agency whose existence he opposes.

So, when CFPB officials show up for work this morning, Mulvaney will be their new boss? Well, not exactly.

President Trump and the outgoing head of the Consumer Financial Protection Bureau both named acting directors to head the watchdog agency on Friday, throwing its leadership into disarray.

Legal analysts were split over whether the White House or the CFPB had authority to name an acting director, with each side citing the fine print of dueling federal rules. Some said the laws were open to interpretation and the courts ultimately would have to decide the matter.

If this sounds messy, it is.

Richard Cordray, the outgoing CFPB director, announced on Friday that his chief of staff, Leandra English, was the new deputy director. According to a variety of observers, including Sen. Elizabeth Warren (D-Mass.), who helped create the agency, the law mandates that the CFPB’s deputy director serve as the acting director until the Senate confirms someone to fill the post.

The Trump administration, however, believes the president has the authority to name his own director, and issued a legal memo to that effect, explaining the justification for the move. I’ll leave it to lawyers to weigh in on the merits, but from a lay person’s perspective, it looks to me like a tough sell: the gist of the argument is that the Vacancies Reform Act empowers a president to fill executive-branch vacancies, which effectively gives Trump the option of honoring the CFPB statute or acting on his VRA authorities.

Or put another way, this is going to end up in the courts. Indeed, Leandra English filed a lawsuit last night, asking a federal court to block Mulvaney.

For Trump World, the confusion may be an annoyance, but it’s not necessarily a problem to be avoided – since the president and his team don’t want the CFPB to continue with its work anyway.

Trump made this explicitly clear over the weekend, turning to Twitter to insist that the Consumer Financial Protection Bureau “has been a total disaster,” which has “devastated” unnamed “financial institutions.”

To the extent that reality still has any meaning in the debate, America’s “financial institutions” haven’t been “devastated” at all: banking profits have soared in recent years and the industry earned a record $48.3 billion during the second quarter of 2017.

For that matter, after railing against Wall Street as a candidate, Trump is now making clear that he’s determined to put the interests of banks over the interests of consumers. Anyone still thinking of this president as a “populist” might want to revisit their assumptions.