The Consumer Financial Protection Bureau had quite a day on Monday, starting off with two bosses and ending up in court to determine whether one or both would get canned. Deputy director Leandra English filed a lawsuit demanding that the federal court recognize her as acting director of the CFPB and impose a temporary restraining order giving her full authority. The White House fired back, arguing that English has no authority and a TRO would undermine accountability within the executive branch:
“A temporary restraining order would radically alter the status quo, disrupt the orderly operation of the agency, and throw into doubt whether the CFPB, under the leadership of an Acting Director, is accountable to the President, or to anyone,” according to the filing in U.S. District Court in Washington late Monday.
The judge has a lot to weigh in this case. On one hand, a TRO in either direction will necessarily do damage if the case turns out to go the other direction. On the other hand, the present status quo of having two diametrically opposed parties attempting to exert control over the CFPB is clearly untenable. The judge tried to test out the staying power of the status quo but couldn’t have been terribly encouraged by the response he received:
At the court hearing, Mulvaney’s attorney, Brett Shumate, a deputy assistant attorney general, was asked by the judge whether the government would agree that English would not be fired, to remove some of the urgency from the matter.
Shumate said he could not “give any representation or assurance on that score.”
In other words, “disruptions” will likely take place no matter which direction Judge Timothy Kelly takes. Kelly, a former aide to Sen. Chuck Grassley and only recently confirmed to the district court, faces a significant challenge in attempting to sort out whether a poorly written clause in Dodd-Frank really allows for a self-perpetuating autonomous bureaucracy with both legislative and executive powers (rulemaking and enforcement), or whether the president retains ultimate control of executive-branch agencies.
It should be a no-brainer, but that’s why we have courts, too. Chuck Schumer and his allies insist that Congress intended to make the progression of interim directors entirely independent of the executive, but if so, they did a piss-poor job of writing the law. Rather than specify that as the outcome from a resignation, they only included language that covers “absences and unavailability,” which seem clearly aimed at temporary absences of a Senate-confirmed and continuing director rather than resignations and terminations. The problem Kelly faces is that if he imposes a TRO in favor of English, she’s not likely to survive the court process all the way through — and Kelly will have usurped executive authority. If he doesn’t, Mick Mulvaney seems likely to fire English, which will bring the issue to a head faster than a trial can be arranged.
Kelly did get some help from Mulvaney in another way:
Mick Mulvaney, President Donald Trump’s pick as leader of the nation’s top financial watchdog agency, said Monday that he was imposing a 30-day freeze on hiring and new rulemaking as he moves to take control of the Consumer Financial Protection Bureau. …
“This agency will stay open. Rumors that I’m going to set the place on fire, or blow it up or lock the doors are completely false,” he said. “I am a member of the executive branch of government. We intend to execute the laws of the United States.”
He said there will be a 30-day freeze on hiring and new rulemaking, as well as a freeze on payment from the civil penalties fund for at least 30 days. He said if there were statutory or legal guidelines, they would be met.
A freeze on all action by the CFPB would allow Kelly to avoid making a snap decision in either direction, as long as it also applies to firing as well as hiring. Kelly appeared to be looking for that reassurance earlier, and it’s puzzling why the White House didn’t play along. They can marginalize English for a few weeks and let Mulvaney take the reins until Kelly can sort out the competing interests. They appear to lucked into a friendly environment, or at least a non-hostile one. Why press your luck?