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Blog: Trump takes control of the CFPB


The Trump administration gained control of the Consumer Financial Protection Bureau (CFPB) this week.

A federal judge on Tuesday put an end to a brief succession battle at the bureau, when he denied CFPB staffer Leandra English's legal motion for a court order blocking Budget Director Mick Mulvaney from taking over the agency as acting director for an interim period.

HMDAdisclosure(1)Former CFPB Director Richard Cordray resigned on Friday and promoted English, his former chief of staff, to deputy director. English filed for a temporary restraining order, arguing that she rightfully assumed the role as acting director under a line of succession established by the Dodd-Frank Act.

Judge Timothy Kelly, recently appointed to the U.S. District Court for the District of Columbia by Donald Trump, ruled that the president had the authority to appoint an acting director under the Vacancy Reform Act, which overrode the succession language in Dodd-Frank.

According to legal experts, this ruling will put the Trump administration in charge of the agency, even if English were to continue to pursue litigation. Mulvaney, a past critic of the CFPB, could hold the office until Trump appoints a replacement.

Mulvaney’s appointment as the temporary head of the bureau also likely marks a significant change in direction for the agency, according to CFPB expert and banking regulatory attorney Joseph Lynyak III, a partner with Dorsey & Whitney. He told Scotsman Guide News that the Trump administration will likely reign in the bureau's enforcement division and put more emphasis on providing guidance.

“Operationally, [one priority], and I believe this is the uniform belief by the industry, is changing the way the CFPB provides instructions and guidance to the industry,” Lynyak said Tuesday prior to Kelly’s ruling. “Right now, they effectively don’t. And even when they talk to you, anything that they [tell the industry by way of informal guidance] can’t be relied upon by the industry.”

While this battle was playing out, two other significant Trump nominees moved closer to confirmation.

By an 18-5 margin, the Senate Banking Committee approved the nomination of Brian Montgomery, Trump’s pick to lead the Federal Housing Administration. Montgomery, who also led the agency during the George W. Bush administration, is strongly supported by the housing and mortgage industries. That nomination now goes to a full vote in the Senate, and is expected to be approved.

Jerome Powell, Trump's pick for chairman of the Federal Reserve, also appeared before the Senate Banking Committee on Tuesday. Powell, who has served on the Fed’s board since 2012, indicated that he will continue the Fed’s existing policy of gradual rate hikes. Powell’s nomination is not viewed as controversial. 


 

Questions? Contact at (425) 984-6017 or victorw@scotsmanguide.com.

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