So Who's In Charge At The CFPB?

[Lord Jim]

Consumer Financial Protection Bureau Has 2 Bosses Claiming Control

WASHINGTON — On Monday, Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, brought in doughnuts. Around the same time, Leandra English, the agency’s other acting director, sent an all-staff email thanking employees for their service.

Awkward.

And so it goes in a capital city defined by its dysfunction, at an agency where two public servants, one a holdover from the Obama administration and another a rushed temporary appointee by President Trump, are messily and publicly vying to lead a controversial agency under constant political assault by Republicans. Ties between the Trump White House and the federal government’s top consumer financial watchdog agency were so frayed by the end of Thanksgiving weekend that hundreds of confused employees came to work not knowing who their director would be.

“I knew on Friday who my boss was,” an employee for the agency, who only gave his first name, Ella, because he was not authorized to speak to reporters, said as he approached the bureau. “But thanks to this idiot, I don’t know.”

(He did not clarify which idiot.)

The bureaucratic roller coaster began with the abrupt departure on Friday of Richard Cordray, an Obama appointee who helped the agency aggressively expand its powers to punish rule-breaking companies. He named Ms. English as his acting deputy director and presumed acting director. The White House responded forcefully by saying Mr. Mulvaney, currently the director of the Office of Management and Budget, would be the one in control until Mr. Trump decided on a permanent successor, whose confirmation could take months.

On Sunday evening, Ms. English filed a lawsuit against Mr. Trump in an attempt to block him from appointing Mr. Mulvaney, who is named in the lawsuit as “claiming to be acting director” of the agency.

More:

https://www.nytimes.com/2017/11/27/us/p ... vaney.html

The resolution for this would appear to rest on which of two seemingly contradictory statutes should prevail:

The legislation that created the agency is fairly clear in noting how a vacancy at the top of the CFPB should be filled. The deputy director "shall serve as acting director in the absence or unavailability of the director," the law says.

That would put newly named Deputy Director Leandra English, who had previously served as the agency's chief of staff, into the role once Cordray's resignation became official at close of business on Friday.

Senior administration officials say that the Federal Vacancies Reform Act of 1998 allows the president to supersede the founding legislation of the CFPB in determining who will lead the agency until a permanent replacement is nominated by Trump and confirmed by the Senate.

https://www.npr.org/sections/thetwo-way ... ection-bur

[Big RR]

this agency seems to attract that sort of shenanigans; when Obama couldn't get the Senate to act, he appointed Cordray during a Congressional recess, and was slapped down by the USSC for that because the repubs maintained that it was still in session and never formally recessed. I guess Trump could just wait until Congress recesses and try the same (unless the dems keep someone there so it does not recess, but I'm not sure if the repubs could just vote to recess and then Trump to make the recess appointment). Of course he would then have to be approved when the senate reconvened, but that's another day.

[Sue U]

As general rules of statutory construction go, a specific statute (Dodd-Frank, creating the CFPB and its procedures) controls over a more general statute (Federal Vacancies Reform Act) and a more recent statute controls over an older statute -- again, Dodd-Frank (a/k/a Consumer Financial Protection Act) (2010), over Federal Vacancies (1998). I'm not gonna waste my time reading the OLC's memo prepared for Don McGahn to justify his desired outcome.

But who knows what the district court will do. In any event, popcorn futures look like a good investment.

[Guinevere]

Agreed, that the more specific and later legislation should control. Apparently, counsel for the CFPB disagrees.

A friend of mine works in the general counsel’s office there, and reports there is a TRO hearing going on right now. I asked him on which director’s behalf he was appearing, but apparently he’s not involved in this one. Yet. In any event, the acting director/deputy director has counsel appearing on her behalf. I’m just not sure from where or what agency. This is a bar exam question in the making…

[Big RR]

Yep, and the TRO hearing could be interesting as well; I'd be interested to see how she could show irreparable harm if she were not named acting director, but I can think of a few ways this could be argued. The arguments for likelihood of success on the merits would also be interesting. And I still wonder if Trump could make a recess appointment next month if the outcome doesn't go his way.

I'm glad I didn't have this question the bar exams I took.

[ex-khobar Andy]

TRO = temporary restraining order

[Guinevere]

Governmental agencies don’t always have to show irreparable harm, just that an injunction would be in the public interest (that’s the standard for state and local agencies in state and federal court in MA). Here, I think the public interest is in upholding and correctly applying the foundational statute. That goes hand in hand with the likelihood of success - the Court will have to decide which statute applies.

[Guinevere]

TRO = temporary restraining order

Yes. Typically only a 10 day order.

[Big RR]

thanks guin, I didn't realize that about irreparable harm.

[Lord Jim]

I still wonder if Trump could make a recess appointment next month if the outcome doesn't go his way.

Unlikely...

Mitch McConnell doesn't trust Trump to make recess appointments either:

Senate Republicans since January have blocked Trump from making recess appointments by holding pro-forma sessions every few days whenever the Senate is otherwise in recess. In doing so, the Senate is never technically in a period of recess that would enable the president, under the Constitution, to make an appointment to his administration that would otherwise require Senate confirmation.

http://www.washingtonexaminer.com/senat ... le/2629853

[Guinevere]

It makes it MUCH easier for me to get injunctive relief.

[ex-khobar Andy]

In about 10 minutes on Google I uncovered the following. JP Morgan Chase is America’s largest bank. In January 2017 they reported record profits for 2016, and Jamie Dimon noted that "Our results this quarter were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses.” Bank of America (number 2) had a 43% increase in profits. Wells Fargo (3) was down a little to a 2016 profit margin of only $21.9 billion. The fact that they had been caught fraudulently ‘creating’ millions of non-existent accounts and fined/penalized $185 million may have impacted that bottom line a little. Apparently you can go to jail for stealing slice of pizza ; but those who perpetrated this criminal activity are free to do it again if CFPB falls or is pushed. Is this what Trump means by "Financial Institutions have been devastated and unable to properly serve the public."? The man has a tenuous relationship with the truth.

[Econoline]

From Wonkette:

• UPDATED: The Intercept reports that Richard Engel, the lawyer who drafted the White House legal memorandum in support of Mulvaney’s right to assume the post at CFPB, just so happens to have been a lawyer for a Canadian payday lender. And this payday lender, NDG Financial Corp., just so happens to have been cited by the CFPB for illegally collecting payments from American citizens. So until August of 2017, Engel was doing battle with the CFPB on behalf of a rapacious bank, and now he offers his unbiased legal opinion that Mulvaney can go in there and gut the agency.

Actually, the whole article is worth reading. Here's a little more:

• It’s a complicated legal dispute, but it largely boils down to (1) Does Dodd-Frank supersede the regular law on federal vacancies, and (2) Is Cordray “absent or unavailable,” or does his resignation mean the position of CFPB Director is vacant? Let’s Lawsplore!!!
  
  UNLESS!
  
  It’s important to understand that Republicans are desperately trying to postpone public confirmation hearings for Cordray’s replacement. They do not want to give Senate Democrats a chance to question whatever banking lobbyist the Koch brothers dig up, and they’d prefer to stab CFPB in the heart before the public gets mobilized to try to save it. Trump will get his nominee through the Senate, but he’s dodging the nomination process so he can kill the agency’s active investigations without publicity.
  
  The 1998 Vacancy Reform Act (VRA) allows the president to shift someone who has already been confirmed by the Senate from one post to another. (That’s why there’s all that speculation that Tillerson will quitfire himself at State and be immediately replaced by Mike Pompeo, who was already confirmed by the Senate to head the CIA.) Mick Mulvaney already has a full-time job at OMB, but he is a guy who consistently sides with corporations and has been confirmed by the Senate. So Republicans are going to let him do double ratfucking duty at OMB and CFPB. The only issue is this pesky “unless” in the VRA, which says the statute doesn’t apply if another law specifies how a vacancy will be filled. And the Dodd-Frank Act, which created the CFPB, specifies that the Deputy Director “shall serve as acting Director in the absence or unavailability of the Director.”
  
  You Say Vacant, I Say Absent, And We’re Both Lying!
  
  Normally, Dodd-Frank (the DFA) would trump the Vacancy Reform Act — it was passed later and as part of the enabling legislation for the CFPB. The attorney general is making an All Laws Matter argument that Trump gets to appoint Mulvaney because the VRA and DFA run concurrently. Which, seems like kind of a reach. On the other hand, Cordray and English are relying on a pretty broad interpretation of “absence or unavailability.” Cordray isn’t on medical leave, he quit. In short, the White House is making a pretty transparent end-run around Senate confirmation of a new director, but Cordray’s attempt to name his own successor is a little hinky, too.

[Big RR]

There was a law professor last night on NPR who discussed the legislative history of the CFPB legislation; apparently the House Bill stated that appointment of an acting director should be per the federal Vacancies Reform Act and the Senate Bill had the current language specifying appointment of the deputy as the interim director; at the conference committee, the senate language was adopted and this is the bill that passed. This looks like a pretty strong argument in favor of not applying the administration's interpretation that the president has the choice to use either (and why this choice would be needed, since he could just appoint the deputy if that is what he chose).

[ex-khobar Andy]

The NYT as you can imagine is strong on this story. I do like this BTL comment:

Jack East Coast 19 hours ago
If you were Russia and trying to quietly dismantle the US Government, it would be hard to top what Trump is already doing. He's filled almost every cabinet and other senior position with someone either grossly incompetent or diametrically opposed to the mission of the organization they are leading.

We have years of rebuilding ahead once he has been flushed from office.

I especially like the image in the last sentence.

[RayThom]

... We have years of rebuilding ahead once he has been flushed from office.

[Burning Petard]

This looks to me as the opening chapter in POTUS Trump's real legacy. The GOP stalled lots of judicial appointments during Obama's second term.
The SCOTUS vacancy was the one that got the publicity, but there were many others that The Senate just stonewalled and never confirmed.

Trump is going strong on these. These judicial appointments seem to me to be the only presidential appointments the Trump administration is actually pushing. This case in this thread is being heard by a new Trump appointee. The impact of these lower level federal judges will go on for decades. Even if Trump AND Pence were impeached successfully and out before the first of January, [a clearly impossible pipe dream, as in I want some of whatever you are smoking] all his judicial appointment would still stand.

snailgate

[Guinevere]

For now, Mulvaney et al win round one. English’s emergency motion for TRO is denied by the judge in open court. No written decision released yet and the news reports give little of his analysis.

Meanwhile English has asked the court to set a briefing schedule for preliminary injunction going into January 2018 (a PI is a still not permanent but of a longer and possibly indefinite duration injunction). However, the standard to grant a PI is the same as a TRO, so the Court may also refuse to hear that kind of motion and go right to an adjudication of the complaint on the merits (subject to motions to dismiss, which would also be coming next). So this may not be over yet, but it also could be. Hard to say without understanding the legal basis for the judge’s ruling.

[ex-khobar Andy]

In practice, how does this work? Judge Kelly ruled against English and let Mulvaney in as Director. In my view that's wrong: but my question is about the process. Did they just get(un) lucky in the case falling to judge who would rule in that direction? If there is an appeal, who chooses the judge who will rule? Is there a way for the litigant (and I assume that an appeal would be filed by English) to shop for a judge who might be more sympathetic?

[Guinevere]

Typically only a final judgment is appealable*, and a TRO is interim relief,so the decision is not appealable. But, the case still proceeds on the merits of the underlying complaint - which is who has the right to be director, as a matter of law. Yes, the TRO looked at that issue, but in a slightly different procedural context.

So, as I said above, the case procedes forward, but without seeing the basis for the ruling, I can’t assess the likehood of success going forward. Probably less than 50/50 since one element of granting a TRO is likelihood of success on the merits but all of the issues on the merits were likely not briefed at the TRO stage.

Federal courts typically assign judges based on a random system, and once assigned, judges do not change. There is usually no ability to judge shop. You get who you get. If and when the matter ends up at the Appeala Court, same thing - although appeals are decided by a panel of judges.

*An appeal from the District Court to the Appeals Court is “as of right” for a final judgment (as opposed to appeal from the Appeal Court to SCOTUS, which is discretionary). Some appeals courts allow “interlocutory” appeals, or appeals of interim matters, but that is a special rule and those appeals are also discretionary.

Federal court proceedings are public (duh) and the record and case docket are available electronically with a free account (a per page fee for documents is charged). I checked the docket just now - still no written order on the TRO (not does it appear there will be one) but the court also entered the following yesterday:”MINUTE ORDER: For reasons stated on the record at the hearing on November 28, 2017, Plaintiff's Motion to treat her emergency Motion for a Temporary Restraining Order as a Motion for a Preliminary Injunction is DENIED. To the extent that the Motion requests that the Court enter a briefing schedule on the merits, the Motion is DENIED without prejudice. The parties shall meet and confer, and submit, by December 1, 2017, a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, should one be filed by Plaintiff by then. If the parties cannot agree on a joint proposed schedule, they shall submit separate proposed schedules. Signed by Judge Timothy J. Kelly on 11/29/2017. (lctjk1) (Entered: 11/29/2017)”

So next up, briefing on the merits (or possibly on a preliminary injunction, which I discussed in my post above).