Mulvaney pledges 'dramatic' shift at CFPB, freezes rules and hiring

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WASHINGTON — The Trump administration's pick as acting director of the Consumer Financial Protection Bureau said Monday that the agency would be "dramatically different" under new leadership, even as a federal judge declined to decide yet on the legality of the appointment.

Mick Mulvaney, who is also the director of the Office of Management and Budget, said President Trump wanted him to "fix" the agency, ensuring it protected consumers without cutting off access to financial services. At the outset, he said he has instituted a 30-day hiring and policymaking freeze while he reviews all rules and guidance still pending before the agency. But he acknowledged some items already out the door, such as the final rule to restrict short-term lending, are beyond his purview to stop.

Though he sounded almost reluctant about it at times in a press briefing with reporters, Mulvaney said the agency would continue operations as normal, but with a twist.

"The agency will stay open," Mulvaney said. "Rumors that I will set the place on fire or blow it up or lock the doors are false. I’m a member of the executive branch of government. We execute the law."

Still, it would be run differently, he said.

"That being said, the way we go about it, the way we enforce it, the way we interpret it, will be dramatically different under the current administration than it was under the last," Mulvaney said. "Anybody who thinks that a Trump administration's CFPB would be the same as the Obama administration's CFPB is being naive. Elections have consequences at every agency, and that includes the CFPB."

His comments come as a legal battle continues to be waged over the legality of his appointment. Leandra English, the deputy director of the CFPB, filed suit late Sunday claiming that she, not Mulvaney, was the legal acting head of the bureau.

District Judge Timothy J. Kelly held a hearing on the matter late Monday, but said the Trump administration needed more time to respond before he could issue a ruling.

These are "important and complicated issues," Kelly said.

English argues that the Dodd-Frank Act, which created the CFPB, specifically allows the director of the agency to name an interim director. Her lawyers also argued that Mulvaney is not distant enough from the administration to run an independent agency.

"The Dodd-Frank Act is very, very clear that it establishes an" independent agency, said Deepak Gupta, a partner with Gupta Wessler who is representing English.

Lawyers for the administration cited analysis by the Justice Department and the CFPB's general counsel that Mulvaney was the rightful interim director of the consumer bureau.

Both sides said a decision needed to be made soon.

Meanwhile, 25 congressional Democrats — including Senate Minority Leader Chuck Schumer of New York, House Minority Leader Nancy Pelosi of California and Sen. Elizabeth Warren of Massachusetts — as well as former Democratic Rep. Barney Frank filed an amicus brief Monday night supporting English’s claim as the acting leader of the agency.

“Whether the White House likes it or not, the law mandates that Deputy Director Leandra English serve as Acting Director of the Consumer Financial Protection Bureau until the Senate confirms a new, permanent Director,” Pelosi said in a statement.

English also drew support from former CFPB Director Richard Cordray, who had appointed her as deputy director before announcing his resignation Friday. In an interview on MSNBC Monday night, Cordray said the law was "clear" that "the deputy director shall act as the director until a nominee is presented to the Senate and confirmed.”

“This is the kind of a disagreement that involves two different laws. They conflict with one another," Cordray said. "The right place to hash that out is in the courts, which is where it is right now. It shouldn’t be decided by name-calling and tweets and insults. It should be decided by people presenting their arguments and a judge thinking it over … and it will ultimately be resolved.”

During his press briefing, Mulvaney disputed the idea that his appointment was improper because he was also a Cabinet official, insisting that the job always answers to the president. He noted that former Treasury Secretary Timothy Geithner helped set up the CFPB when it was created by the Dodd-Frank Act before the Obama administration chose Cordray as the agency’s first director.

"This is how it's been done here," Mulvaney said. "I will be as closely tied to Donald Trump as president as Secretary Geithner and Mr. Cordray were to President Obama. I don't think it's anything different."

(The Dodd-Frank Act specifically gave the power to the Treasury secretary to set up the bureau, but that part of the law no longer appears to apply in this case.)

Mulvaney said he would work three days a week at CFPB and three days a week at OMB. He also stood by his past criticisms of the CFPB, which he once described as "sick" and "sad."

"My opinion of the CFPB has not changed," he said. "I still think it's an awful example of a bureaucracy that has gone wrong and is almost entirely unaccountable to the people that are supposed to oversee it and supposed to pay for it. I still have the same fundamental principled misgivings about the way this bureau is structured. ... That being said, that is outside the bounds of the director to fix."

He said he supported efforts to put the CFPB on congressional appropriations and add more safeguards, but that was an issue for Congress, not him.

"I was just learning about the powers that I have as acting director — they would frighten most of you," he said. "It would probably worry you to find out how little oversight Congress has over me right now as acting director."

Asked if he would eliminate the agency if he could, Mulvaney said he would have preferred to have consumer protection functions stay with other government agencies as they were previously prior to Dodd-Frank.

He also took the CFPB to task for failing to uncover problems at Wells Fargo last year. Though the agency took a joint enforcement action against Wells related to its employees opening potentially millions of phony accounts, Mulvaney questioned why it hadn't been detected sooner.

"I am disturbed by what happened at Wells Fargo," he said. "My question is: Why did [the CFPB] miss it?"

Overall, he said his goal was to change the way the agency enforced consumer protection laws.

President Trump "wants me to fix it," Mulvaney said. "He wants me to get it back to the point that it can protect people without trampling on capitalism, without choking off the access to financial services that are so critical to so many folks, and so many folks in the lower and middle classes."

Senate Democrats, meanwhile, continued to sharply criticize the appointment, saying it was unlawful and improper. Warren and Schumer held a joint appearance with English to support her.

"Right now we need the courts to play this out," Warren told reporters. "President Trump has put a cloud over the agency by invoking a statute that doesn't apply here."

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