Source: http://blog.legalsolutions.thomsonreuters.com/top-legal-news/a-showdown-over-the-consumer-financial-protection-bureau/
Timestamp: 2018-06-25 00:23:09
Document Index: 458554578

Matched Legal Cases: ['§ 5491', '§ 3345', '§ 5491', '§ 5491', '§ 3347', '§ 5491']

Legal Solutions Blog A Showdown over the Consumer Financial Protection Bureau - Legal Solutions Blog
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The resignation of Richard Cordray as Director of the Consumer Finance Protection Bureau (CFPB) has resulted in a stand-off between the current Deputy Director, Leandra English, and Director of the Office of Management and Budget (OMB), Mick Mulvaney, as to who will be the temporary Acting Director of the Agency until a new Director is appointed by the President and confirmed by the Senate.
Before resigning, Cordray designated English to become the Deputy Director of the Agency, thereby making her the temporary Acting Director of the Agency pursuant to 12 U.S.C.A. § 5491(b)(5). However, after Cordray’s departure, the White House announced the appointment of Mulvaney to serve as the temporary Acting Director of the Agency, in a press release. The White House points to the Federal Vacancies Reform Act (FVRA), specifically under 5 U.S.C.A. § 3345(a)(2) and (3) for the authority to appoint Mulvaney. Following the White House appointment of Mulvaney, English filed suit in Federal District Court for the District of Columbia asking the court to: 1) declare her as the Acting Director pursuant to 12 U.S.C. § 5491(b)(5), 2) hold that the FVRA does not apply to the appointment of a temporary Acting Director of the CFPB, 3) enjoin the President from appointing any other individual as Acting Director of the CFPB, and 4) enjoin Mulvaney from accepting the appointment. These events resulted in two individuals claiming to be the serving as the interim Acting Director of the Agency and raised questions as to which Federal Statute would govern the appointment of the temporary Acting Director.
In her complaint, English argues that she is now the temporary Acting Director of the Agency. 12 U.S.C. § 5491(b)(5) states “[t]here is established the position of Deputy Director, who shall—(A) be appointed by the Director; and (B) serve as acting Director in the absence or unavailability of the Director.” The plaintiff argues this explicit statutory language, passed as part of the Dodd-Frank Act, points to Congress’ “deliberate choice to depart from the default procedure for naming an acting official under the [FVRA].”
Additionally, English argues that the FVRA itself contains a provision making it inapplicable to the situation, per5 U.S.C.A. § 3347 (a)(1)(B) which states that Section 3345 would not apply if “a statutory provision expressly . . . designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” To further support her contention that Congress provided an explicit statutory scheme for appointment, English points to legislative history for Dodd-Frank. She argues that an earlier version of Dodd-Frank specifically allowed the President to use the FVRA to temporarily appoint a director but that the language was removed and replaced for a deputy director acting as director. Thus, the plaintiff argues because Dodd-Frank provides an explicit statutory scheme, section 5491 would apply and not the FVRA.
The complaint further alleges that the appointment of Mulvaney also violates the “foundational principles of agency independence that Congress codified by the Dodd-Frank Act.” English argues that appointing a “still-serving White House staffer as the acting head of an independent agency” destroys the independent nature of the CFPB. If appointed as the temporary Acting Director of the CFPB, Mulvaney would become the Director of both the OMB and the CFPB. Congress enacted the Dodd-Frank Act in 2010 as a response to the 2008 financial crisis. As part of the Dodd-Frank Act, Congress created the CFPB. It is the first federal agency with the mission to protect consumers who participate in the financial services industry. Plaintiff argues that Congress was deliberate in creating an independent agency and appointing Mulvaney would destroy that independence.
As of November 30, 2017, defendants have not yet filed an answer, but the Department of Justice’s Office of Legal Counsel, along with the White House, and the CFPB’s General Counsel support the argument that the FVRA allows the President to appoint Mulvaney as temporary Acting Director. CFPB’s General Counsel, Mary McLeod, provided a memo that outlines her arguments as to why the FVRA controls, thus allowing the appointment of Muvlaney. She asserts that it may be debatable as to whether the resignation by Cordray qualifies as an “absence or unavailability of the Director” under § 5491(b)(5).
Regardless of the semantics debate, McLeod argues that “statutory language, legislative history, precedent from the Office of Legal Counsel at the Department of Justice, and case law” point to the President’s ability to use the FVRA “to designate an acting official, even when there is a succession statute under which another official may serve as acting.” In her memo, McLeod argues that Congress was generally aware that the FVRA could apply to vacancies but chose not to expressly preempt it and did not expressly provide for the Deputy Director to serve in the event of a vacancy or a resignation. She also cites to Hooks v. Kistap Tenant Support Services where the Ninth Circuit Court of Appeals held that neither the FVRA nor the National Labor Relations Act provision—relating to the appointment of an Acting General Counsel for the NLRB—were the exclusive means for appointment. The Department of Justice’s Office of Legal Counsel also issued its own memo. The DOJ’s echos the CFPB’s General Counsel memo by addressing issues around whether section 5491 applies to a resignation and whether FVRA applies. These arguments may be a precursor to what is argued in the answer.
In addition to the complaint, English also filed for an emergency motion and memorandum in support for a temporary restraining order. After the defendants filed an opposition to the plaintiff’s motion for a temporary restraining order, the Federal Judge denied the emergency motion. In denying the emergency motion the Federal Judge agreed with the defendant’s interpretation of the FVRA’s application to the situation at hand. English can file for a preliminary injunction and appeal the denial.
While there have been many cases that have dealt with Presidential appointments this is the first lawsuit dealing with appointment for the Director of the CFPB and the outcome may have practical and political ramifications on the bureau and its mission. Regardless of the outcome, it seems highly probable that the final decision will be appealed.
The docket number for the case is 1:17-CV-02534.
Image source: Joshua Roberts/REUTERS