Updated 7:53 p.m.

The relationship between the U.S. Justice Department and Consumer Financial Protection Bureau, already fraught under the tenure of U.S. Attorney General Jeff Sessions, moved to even shakier territory when the two agencies staked out opposing positions over the rightful successor to Richard Cordray.

The Justice Department's Office of Legal Counsel endorsed the view that, under the Federal Vacancies Reform Act, Trump could appoint any Senate-confirmed official to step in as the CFPB's acting director, senior Trump administration officials said Saturday.

Leandra English. Credit: Credit Union National Association.

The administration named Mick Mulvaney, director of the Office of Management and Budget, as the CFPB's interim head on Friday, just hours after CFPB Director Richard Cordray announced he was resigning and named his chief of staff, Leandra English, as deputy director in an apparent effort to stave off a Trump-picked successor.

The Office of Legal Counsel, which confronts legal questions facing executive agencies, informally issued that guidance to the White House. Late Saturday, the Justice Department published the opinion, written by Steven Engel, the assistant attorney general in charge of OLC. Engel joined the Trump administration from Dechert.

The move marked the latest flare-up between the Justice Department and the CFPB, the Obama-era agency long in the crosshairs of financial industry companies and Republican leaders on Capitol Hill. The agency has long fought credit card companies, mortgage lenders and debt collectors, collecting billions in penalties.

The Justice Department in March abandoned its defense of the CFPB's single-director structure. In the aftermath, U.S. attorney offices walked away from CFPB in federal trial court cases in which prosecutors had been serving as local counsel.

The CFPB and the Justice Department appear to be approaching a fresh standoff in federal court over the leadership of the agency. White House officials, however, downplayed the idea there would a lawsuit over who is rightfully serving as acting director.

Asked about English, one White House official said, “We expect her to be there on Monday. She's the deputy director of the CFPB. She should be there on Monday.”

Cordray asserted that under the Dodd-Frank Act, the financial reform statute that created the CFPB, English would serve as acting director until the Senate confirmed any nominee from Trump. Announcing English's new role, Cordray cited “section 1011(b)(5) of the Dodd-Frank Act,” which states that the deputy director “shall … serve as acting director in the absence or unavailability of the director.”

A senior Trump administration official said Saturday that similar language appears in statutes concerning other agencies where the president can appoint an acting director under the Federal Vacancies Reform Act.

The law does not apply to certain independent agencies, but the CFPB does not qualify for such an exception because it is not run by a multimember commission, the administration official said. “To us, this seems like a clear-cut legal question,” the official said. President Trump assailed the bureau in a tweet Saturday:

The tension has thrust the first significant transition of power at the CFPB into a state of confusion. Indeed, two people appear poised to walk into the CFPB's headquarters, just a block away from the White House, on Monday asserting to be its leader.

“We'll find out how Ms. English decides to act at the appropriate time,” said one White House official. “We think, again, we have gone out of our way to avoid an unnecessary legal battle with Mr. Cordray and his actions clearly indicate he's trying to provoke one.”

A spokesman for the CFPB did not immediately respond to a request for comment Saturday.

Mayer Brown partner Andrew Pincus, who led the legal challenge to uphold restrictions that block consumers from forming class actions to sue banks, said in a blog post Saturday: “There is no serious argument that the Dodd-Frank Act precludes the president from exercising his authority under the Vacancies Act.”

Pincus added: “Hopefully, November 27 will not see dueling acting directors attempting to administer the CFPB.”

 

The Justice Department's OLC opinion is posted below.