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CFPB Directorship Succession: What the Dodd-Frank Act's Legislative History Tells Us

posted by Adam Levitin

With the announcement by CFPB Richard Cordray that he will be leaving the agency by the end of the month, the question arises who will succeed Cordray as Director. Numerous news outlets have run stories that President Trump is planning on naming OMB Director Mick Mulvaney as acting CFPB Director, with the expectation that Mulvaney will delegate his authority to some individual who doesn't have to go through Senate confirmation. There's just one catch: the President lacks the legal authority to appoint Mulvaney, or anyone else, as acting Director of the CFPB.  

The idea that the President could appoint an acting Director for the CFPB until such time as the Senate confirms a Director derives from the belief the the CFPB's Directorship succession is controlled by the Federal Vacancies Act. The FVA is the default setting for federal agency succession and it applies unless the statute governing an agency expressly provides for a different succession. If the FVA applies it allows the President to put in any Senate-confirmed individual as an acting Director for up to 210 days or for as long as a nomination is pending before the Senate (which means that the acting appointment could be indefinite given GOP control of the Senate). Either way, the President gets control over the agency without going through public scrutiny of the Senate confirmation process.   

Most analyses of whether the FVA applies conclude that it does (see here, e.g.). They're wrong. The Consumer Financial Protection Act expressly provides for a different succession, namely for the CFPB's Deputy Director to assume the role of acting Director: "the Deputy Director ... shall... serve as acting Director in the absence or unavailability of the Director." That plain language is an express provision for a different succession, and this makes sense as a policy matter--why design an agency to be insulated from Presidential control, only to hand the keys to the White House whenever the Director leaves before the expiry of his term? 

There's certainly some debate about how to read the Consumer Financial Protection Act vis-a-vis the FVA: the Consumer Financial Protection Act doesn't use the term "vacancy," although the use of that term is not required by FVA, which merely requires that "a statutory provision expressly ... designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity." The FVA doesn't require any particular magic words, only an express provision. To be sure, one might argue just from the text about what "absence or unavailability" covers--perhaps it covers situations other than and short of vacancy?--but there's a kicker that has been entirely ignored in all the analyses I've seen:  the legislative history of the Consumer Financial Protection Act.  

The version of the Consumer Financial Protection Act that originally passed the House was very clear that the FVA applied. It stated that "In the event of vacancy or during the absence of the Director (who has been confirmed by the Senate pursuant to paragraph (2)), an Acting Director shall be appointed in the manner provided in section 3345 of title 5, United States Code." Section 3345 of title 5 is the FVA. The quoted language didn't make it into the enacted version of the legislation. Instead, the conference committee that reconciled the House and Senate bills adopted the language in the Senate bill, about "absence or unavailability." In other words, Congress knew very well how to say that the FVA applies ... but ultimately decided that it would not apply. To my mind, this legislative history resolves any ambiguity about whether the Consumer Financial Protection Act's language qualifies as an express provision opting out of the FVA succession line.  

Bottom line: any appointment of Mick Mulvaney ... or Steve Mnuchin ... or anyone by President Trump to be acting CFPB Director would be illegal, and would call into question not only any actions taken by the CFPB, but also actions undertaken by the FDIC and FSOC, as the CFPB Director serves on those boards. If President Trump wants to choose the CFPB Director, there's a straight-forward way of doing it:  go through Senate confirmation.


Who has standing to actually challenge this, though? Will Silberman?

“To my mind, this legislative history resolves any ambiguity about whether the Consumer Financial Protection Act's language qualifies as an express provision opting out of the FVA succession line.”

Exactly. To YOUR mind, which was made up on any matter involving President Trump’s prerogatives well before he took the oath of office.

Being a political hack and a so-called legal analyst do not go well together. Another, entirely plausible interpretation of the conference committee leaving the language out is that it was a typically-shrewd political attempt by Democrats to minimize the efforts of any future CFPB-opposing president who might try to reign in the leviathan in exactly these circumstances.

Hmm. Or could it be that my political views stem from my analysis of the world?

I know this much: I'm not the one claiming that Congressional Democrats were so clever and prescient that in 2010 they planted the seeds of doubt for thwarting a 2017 Trump putsch, but for some reason didn't go far enough to have language saying "This provision governs vacancies following resignations, no matter what any other law, including the Federal Vacancies Act says."

As if the CFPB needs any more constitutional defects. Its now the position of the democrats that this buera can escape oversight by Congress by getting its budget directly from the Fed, can escape Presidential oversight by having is Director removable only by the President for cause, can vest vast regulatory power in a single director, and now an outgoing director can appoint his or her successor who can serve infinitely until a new Senate confirmed director is appointed (possibly taking months, or years.) Its a wonder we have any institutions accountable to the President or Congress at all. Why not insulate all budgetary powers, control over the military, foreign relations, and law enforcement from the awful inconvenience of oversight from elected officials. In reality the question of succession is not between the FVA or Dodd-Frank, its a constitutional one. The President has the power to oversee the executive. Insulating a Director (or active Director) in the way being advocated is unconstitutional. This should be glaring apparent especially given recent ruling in PHH Corporation v. Consumer Financial Protection Bureau.

An ad-hominem-spewing political axe-grinder posting under a variation of the name of the chair of Clinton's 2016 train wreck? I think "Jon Podesta" scores a 10 on the Trollometer.

The omitted language ("In the event of vacancy or during the absence of the Director") suggests that they were not treating "absence" and "vacancy" as synonymous.

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