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Cordray Resignation Plunges CFPB Into Leadership Chaos

Richard Cordray officially resigned as director of the Consumer Financial Protection Bureau yesterday, but in doing so pushed the agency into chaos over who will be the agency’s next leader.

Rather than waiting until the end of the month as he originally indicated, Cordray’s resignation became effective at midnight Saturday morning.

Prior to resigning Cordray announced that he had named Leandra English, the CFPB’s chief of staff as its new deputy director. According to the Dodd-Frank Act, the law that created the CFPB, the deputy director assumes the director’s responsibilities in the event of a vacancy.

But President Donald Trump yesterday named Mick Mulvaney, currently the head of the White House Office of Management and Budget as interim director of the CFPB. Trump is using the Federal Vacancies Act, which allows the president to appoint an interim director to run an agency as long as that individual has already been confirmed by the Senate for another position.

The Dodd-Frank Act says that the deputy director will “serve as acting Director in the absence or unavailability of the Director,” but it’s the word “unavailability” that is open to interpretation. At least one consumer advocate said it may be the courts that have to ultimately determine who is in charge at the CFPB.

For the interim, that could mean the agency becomes paralyzed while there is nobody in charge. Mulvaney has called the CFPB a “joke” and said that he “doesn’t like the fact that CFPB exists” in previous interviews.

For the long-term, it is expected that a Republican replacement will scale back the CFPB’s enforcement prerogatives and activities, including in the area of debt collections.

English replaces David Silberman, who had been acting deputy director of the CFPB. Prior to being promoted to acting deputy director, English was chief of staff, deputy chief of staff, and deputy chief operating officer. She has also worked at the Office of Management and Budget and the Office of Personnel Management. Silberman will remain the CFPB’s associate director of research, markets, and regulation.

Cordray did not mention English’s promotion is his resignation letter to President Trump. Cordray was the last remaining appointee of former president Barack Obama as head of a federal agency. His five-year term was due to expire next summer.

Cordray was the first permanent director of the CFPB. The agency was created as a result of the financial crisis to regulate financial institutions in their dealings with consumers.

In a statement, Mulvaney said: “I believe Americans deserve a CFPB that seeks to protect them while ensuring free and fair markets for all consumers.”

 

 

 

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