July 12, 2020

Volume X, Number 194

July 10, 2020

Subscribe to Latest Legal News and Analysis

July 09, 2020

Subscribe to Latest Legal News and Analysis

Federal Court Asked to decide who is CFPB Acting Director

Last Friday, November 24, effective at midnight, Richard Corday resigned as CFPB Director.  Earlier in the day, the CFPB issued a press release announcing that Mr. Cordray had named Leandra English, the CFPB’s Chief of Staff, the CFPB Deputy Director.

Yesterday, Ms. English filed a complaint in D.C. federal district court seeking a declaration that she is the CFPB’s Acting Director and Mick Mulvaney, President Trump’s appointee to serve as Acting Director, is not the Acting Director.  She also filed an emergency motion for a temporary restraining order to prevent President Trump and Mr. Mulvaney “from appointing, causing the appointment of, or recognizing the appointment of an Acting Director of the [CFPB] via any mechanism other than that provided for by [the Consumer Financial Protection Act.]”

On Friday afternoon, following the CFPB’s announcement of Ms. English’s appointment, the White House issued a press release announcing that President Trump had designated Mr. Mulvaney, the Director of the Office of Management and Budget, to “serve as Acting Director until a permanent director is nominated and confirmed.”  The announcement was consistent with earlier reports that President Trump intended to appoint Mr. Mulvaney to serve as Acting Director effective upon Mr. Cordray’s resignation.

On Saturday, the DOJ’s Office of Legal Counsel (OLC) issued a memorandum to the President’s Counsel in which the OLC opined that the President had the legal right to appoint Mr. Mulvaney under the provision of the Federal Vacancies Reform Act (FVRA) that authorizes the President to temporarily fill an “executive agency” position requiring confirmation with someone serving in an acting capacity when the position becomes vacant because the person holding it “dies, resigns, or is otherwise unable to perform the functions and duties of the office.”  In the OLC’s opinion, the FVRA provision can be used by the President to override the provision in the Consumer Financial Protection Act (CFPA) that provides that the Deputy Director “shall serve as Acting Director in the absence or unavailability of the Director.”  (On Saturday, the CFPB’s General Counsel issued a memorandum to the CFPB’s Senior Leadership Team in which she agreed with the OLC’s analysis of the FVRA.)

In her memorandum in support of a TRO, Ms. English argues that the President’s use of the FVRA to appoint Mr. Mulvaney as Acting Director is unlawful because it contravenes the CFPA’s “specific, mandatory plan for filling the vacancy in question.”  Ms. English’s legal position is thus based on the premise that the CFPA provision that states the Deputy Director shall serve as Acting Director in the Director’s “absence or unavailability” covers a vacancy created by the CFPB Director’s resignation.  In its opinion, the OLC stated that “while the question is not free from doubt,” it believed “unavailability” should be construed to include a vacancy resulting from a resignation.

We continue to believe that compelling arguments can be made to support the position that “absence or unavailability” does not include a vacancy resulting from the Director’s resignation and will soon be publishing another blog post discussing those arguments.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VII, Number 331

TRENDING LEGAL ANALYSIS


About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

...
215-864-8544