Trump should win the battle over the Consumer Financial Protection Bureau.

The Battle Over the Consumer Financial Protection Bureau Is a Legal Fight Trump Should Win

The Battle Over the Consumer Financial Protection Bureau Is a Legal Fight Trump Should Win

The law, lawyers, and the court.
Nov. 27 2017 5:11 PM

A Legal Fight Donald Trump Should Win

The president is in the right in the battle over who should lead the Consumer Financial Protection Bureau.

U.S. President Donald Trump
President Donald Trump speaks in the Rose Garden of the White House in Washington on Tuesday.

Jim Bourg/Reuters

If you’ve been following the goings on at the Consumer Financial Protection Bureau, you could be forgiven for thinking there’s a constitutional crisis brewing in Trump’s America. It started on Friday when CFPB Director Richard Cordray stepped down and named his former chief of staff, Leandra English, as the bureau’s deputy director, a position that would seemingly entitle her to serve as the group’s interim director until Congress confirmed Cordray’s successor. For authority, Cordray cited the Dodd-Frank Act, which states that when the CFBD director is “unavailable,” the deputy serves as acting director.

Enter President Donald Trump, who, just a few hours after Cordray’s move, named Office of Management and Budget Director Mick Mulvaney to lead the CFPB on an interim basis. Mulvaney believes the group, which guards against predatory schemes by banks and lenders, should not exist. (He has called the CFPB “a sick joke.”) He also has another full-time job down the street at OMB. But Trump cites his authority under the Federal Vacancies Reform Act, and Trump’s Office of Legal Counsel filed a memo Saturday contending that the president has the clear legal authority to fill the spot.


This devolved into a national Twitter war over the weekend, with Team FVRA bashing Team Dodd-Frank and vice versa all up and down the internet. On Sunday, English filed a lawsuit challenging Mulvaney’s claim to the CFPB directorship and asked the courts to declare that she is the rightful acting director. (The case has been assigned to a Trump appointee, U.S. District Court Judge Timothy Kelly.) CFPB general counsel Mary McLeod, meanwhile, sided with the Trump administration. Mulvaney arrived at the bureau’s Washington headquarters on Monday morning brandishing a bag of doughnuts for the staff. His staffer tweeted a picture of him “hard at work as acting director.” One minute later, English sent an email to staff describing herself as acting director. Then Mulvaney circulated an email directing staff members to ignore English but to help themselves to doughnuts.

Gripping as this doughnut-laden political dispute may be, the legal battle revolves around a rather arcane clash of statutes. Given that two separate laws govern the replacement of an executive agency’s director, the question is which one controls here. On the one hand, the FVRA states that when an officer like Cordray resigns, the president “may direct” an individual who has already received Senate confirmation for his or her current position to assume that officer’s duties temporarily. In February, the Senate confirmed Mulvaney as director of OMB, so he would seem to fit this description, rendering his appointment legitimate.

But Dodd-Frank, the subsequent law that created the CFPB, provides a different mechanism for replacing the board’s director. The statute declares that the deputy director “shall … serve as acting director in the absence or unavailability of the Director.” English argues that, upon his resignation, Cordray became “absent,” allowing her to become “acting director.” She also contends that this regulation was intended to insulate CFPB from presidential whims. That sounds right—but so does Mulvaney’s argument on the FVRA. So which statute wins?

Slate contributor and University of Chicago Law School professor Daniel Hemel points to a provision in Dodd-Frank that weighs in Mulvaney’s favor. The law states that “except as otherwise provided expressly by law,” all federal laws “dealing with” federal officers “shall apply” to the CFPB. The FVRA is clearly such a law, so unless Dodd-Frank “expressly” overrides it, the statute applies here. And nothing in Dodd-Frank explicitly disavows the application of the FVRA to the CFPB. If the authors of the bill had intended to set up an exclusive line of succession for the agency, they could have. Instead, they included “a yield sign,” as Hemel put it, allowing the FVRA to prevail.


There is another good reason to interpret the FVRA this way: English’s argument raises serious constitutional concerns. The CFPB may be an “independent agency,” but it is still part of the executive branch. Trump, in whom the Constitution vests “the executive power,” must have some meaningful control over the bureau. Yet English—who was selected not by a president but by Cordray himself—claims Trump cannot even appoint the CFPB’s acting director. As Jonathan Adler notes, her position “would take agency independence to a new level,” placing the CFPB in the hands of a democratically unaccountable bureaucrat until the president formally replaces her. Bloomberg View’s Noah Feldman makes a similar point, writing that English’s argument “contradicts basic principles of democratic legitimacy.”

Federal courts must attempt first and foremost to interpret ambiguous statutes in a manner that comports with the Constitution. And since English’s reading of Dodd-Frank could unlawfully infringe on the president’s executive authority, the courts have good reason to rule against her. If she and Mulvaney have reached a statutory stalemate, the lurking constitutional issue should probably break the tie in Trump’s favor.

Until it does, the unseemliness of two acting directors striding around CFPB, slinging doughnuts hither and thither and firing off conflicting emails, demonstrates just how bizarre the 2017 version of a constitutional crisis can become. Perhaps the real lesson to be gleaned here is that the anti-democratic and corrosive nature of the Trump era is more of a power problem than a legal one. Progressives are in danger of confusing a lawful but noxious political attack of the CFPB with an illegitimate siege of the agency. They aren’t the same thing.

Trump and Mulvaney will try to use the CFPB to dismantle consumer protections, and Mulvaney will make preposterous claims about how big businesses need more protection. Elizabeth Warren and Chuck Schumer will correctly contend that Mulvaney’s CFPB is damaging human lives and livelihoods to protect the powerful. That isn’t a legal problem that a court can resolve by preserving English’s questionable grasp on power. It is a fundamentally political act of violence against the CFPB that calls for a political solution.

Lawyers can do extraordinary work when the legal scaffolding is on their side—see, for instance, the litigation against the travel ban and efforts to strip sanctuary cities of their federal funding. But attorneys have less success when the law is murky and the norms are soft. These are the moments in which pure power rushes in to fill the gaps. Democrats can’t win this fight by publicly backing English. They probably can’t win it at all. But they might be able to win the next battle—over Trump’s eventual nominee for a director to succeed the acting director—by mounting support for the CFPB in the Senate. The war over the soul of the agency will be fought in Congress, not the courts.

Until the English saga is resolved, the CFPB may be largely paralyzed by internal chaos—a bonus for the Trump administration, which wishes to render the agency feckless. Once they’ve captured the bureau, Mulvaney and his Trump-selected successor will undoubtedly defang and dismantle the Wall Street watchdog. Their subversion may fatally undercut the agency’s purpose and mission, but it probably won’t break the law. Progressives can’t rely on lawyers to save the CFPB from Trump. They’ll have to win elections instead.

One more thing

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Dahlia Lithwick writes about the courts and the law for Slate and hosts the podcast Amicus.

Mark Joseph Stern covers courts and the law for Slate.