CFPB's English sues Trump administration to block Mulvaney appointment

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Leandra English, the deputy director of the Consumer Financial Protection Bureau, sued the Trump administration late Sunday to block the appointment of Office of Management and Budget Director Mick Mulvaney as interim director of the consumer agency.

The lawsuit was filed by English herself, not the CFPB, which took the official position that Mulvaney is in charge. The agency's general counsel, Mary McLeod, drafted a memo late Sunday supporting the Trump administration's position. "I advise all Bureau personnel to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB," McLeod wrote.

The lawsuit , English v. Trump, was filed in the U.S. District Court for the District of Columbia, seeking an injunction ordering President Trump to halt the Mulvaney appointment.

English was appointed deputy director on Friday as CFPB Director Richard Cordray stepped down, a role that would serve as acting director in the absence of a Senate-confirmed leader. But hours later, President Trump named Mulvaney as the acting director, leaving it unclear which of the two was the lawful head of the CFPB.

English has been in the unenviable position of having to decide whether she will sue the president on what would be just her second day in the job. The lawsuit seeks a quick judgment from the court as well as a temporary block to Mulvaney's appointment. American Banker reported earlier Sunday that a lawsuit by English was in the offing.

In a statement, Sarah Huckabee Sanders, the White House press secretary, said "the law is clear: Director Mulvaney is the acting director of the CFPB."

She specifically cited the memo by McLeod that said the Mulvaney appointment was legitimate.

"Now that the CFPB's own general counsel — who was hired under Richard Cordray — has notified the bureau's leadership that she agrees with the administration's and [the Justice Department]'s reading of the law, there should be no question that Director Mulvaney is the acting director," Sanders said. "It is unfortunate that Mr. Cordray decided to put his political ambition above the interests of consumers with this stunt."

Still, the issue is likely to remain in flux until a court makes a decision.

"The legal issues are complex enough that the leadership of the bureau is likely to remain uncertain until a court definitively resolves it," said Christopher Peterson, a law professor at the University of Utah's S. J. Quinney College of Law, and a former CFPB special adviser to Cordray.

English's lawsuit delves into two distinct legal areas. The first is a statutory conflict between the Dodd-Frank Act and the Federal Vacancies Reform Act over who has the right to appoint an interim successor at the agency.

The second legal argument, which has received less attention, is whether the White House is trying to improperly assume control of an independent agency by naming Mulvaney, who reports directly to the president and has the status of a Cabinet-ranked position as head of OMB.

"The President may not, consistent with the statutory requirement of independence, install a still-serving White House staffer as the acting head of an independent agency—particularly when doing so would displace an acting head who has a clear legal entitlement to the position," the lawsuit says.

Naming Mulvaney to head the CFPB while he also reports directly to President Trump is akin to naming a senior adviser at the White House to simultaneously be chair of the Federal Reserve Board, Peterson said.

"The reason the Fed is an independent agency within the executive branch is that Congress wanted the Fed's monetary policy decisions to be separate from politics," Peterson said.

The director of the CFPB is also supposed to be shielded from politics because of the judicial and law enforcement functions of the job, which involve filing enforcement actions and deciding appeals.

"It's true that Congress demonstrated an intent in the Dodd-Frank Act for the bureau to be independent and having someone run the agency who reports directly to the executive office of the president goes against the notion of independence," said Jenny Lee, a partner at Dorsey & Whitney.

The Dodd-Frank Act, which created the CFPB, explicitly specified the role of the president. It states that the president can nominate a CFPB director who is confirmed by the Senate and can only fire the director "for cause."

"Those are his powers; that's it," said Peterson.

To be sure, the CFPB has been headed by a Cabinet official in the past. When it was created in 2011, then-Treasury Secretary Timothy Geithner played a role in setting up the agency. But that was allowed under a special statutory section in Dodd-Frank and only applied to setting up and launching the agency.

The Trump administration has only taken a position so far on the first legal argument, saying that the Vacancies Reform Act gives the president broad discretion on appointments.

The White House said Saturday that the Federal Vacancies Act takes precedence over language in Dodd-Frank, which says that the bureau's deputy director will serve as acting CFPB director in the "absence or unavailability of the director." It released a Justice Department memo late Saturday detailing its legal justification for the move.

Outside lawyers are divided on the matter. Laurence Tribe, a constitutional law professor at Harvard Law School, said in a tweet that Trump is "100% wrong on who steps into Cordray's shoes," based on the history and drafting of Dodd-Frank. He was supported by former Rep. Barney Frank, D-Mass., who told news outlets that congressional intently clearly gave the power to a CFPB director.

But some outside lawyers said the administration has a strong case.

Andrew Hessick, a law professor at the University of North Carolina School of Law, said he was not aware of any statute that prohibits dual appointments.

"This is a special action when two people are claiming the same office and how the courts resolve it," Hessick said. "There might be a lawsuit filed and almost certainly the president's position will win because his argument is pretty good, and even outside the law, the president has an awful lot of power when it comes to these kinds of appointments, and he and Congress can makes life miserable for the CFPB."

In her memo, the CFPB's McLeod said the battle over the wording of Dodd-Frank wasn't important.

"The statutory language, legislative history, precedent from the Office of Legal Counsel at the Department of Justice, and case law all point to the conclusion that the President may use the Vacancies Reform Act to designate an acting official, even when there is a succession statute under which another official may serve as acting," she wrote. "As General Counsel for the Bureau, it is my legal opinion that the President possesses the authority to designate an acting director for the Bureau."

Historically courts resolve this type of dispute through a ruling on a writ of quo warranto, a special form of suit used to resolve a fight over whether a specific person has the legal right to hold public office. Even if a lawsuit is filed, there is still the prospect that both English and Mulvaney will report to the CFPB for work on Monday morning claiming to be the leader.

Lawmakers are already weighing on the matter. Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee, issued a press release late Sunday saying English was the legal head of the CFPB.

"The Dodd-Frank law is clear that Deputy Director English is the legal acting director, and she must be allowed to continue the agency’s work standing up for working families against financial abuse until a permanent Director is confirmed by the Senate,” Brown said.

English has served as the CFPB's chief of staff, deputy chief operating officer, as well as acting and deputy chief of staff.

She had been a principal deputy chief of staff at the Office of Personnel Management, the chief of staff and senior adviser to the deputy director for management at the White House Office of Management and Budget, and was a member of the CFPB implementation team at the Treasury Department during the Obama administration.

English retained Deepak Gutpa, the founding principal of Gutpa Wessler, a boutique law firm that specializes in Supreme Court, appellate and complex litigation on constitutional and consumer rights issues.

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