Credit Union Group Sides With Trump in CFPB Leadership Dispute

By Chris Bruce

The nation’s largest credit union trade group has jumped into a court battle over the leadership of the Consumer Financial Protection Bureau, saying President Donald Trump has the power to pick the agency’s acting director.

The Credit Union National Association, based in Madison, Wis., and Washington, filed a proposed friend-of-the-court brief, saying the Federal Vacancies Reform Act gives President Trump clear authority to appoint Office of Management and Budget Director Mick Mulvaney as the CFPB’s acting director.

Leandra English, who also claims the title of acting director, has sued the administration to block Mulvaney from the post. She says the Dodd-Frank Act operated to automatically make her acting director “in the absence or unavailability of the Director” as soon as former CFPB Director Richard Cordray resigned Nov. 24.

However, the proposed CUNA brief, which marks the first such filing in the case by the financial services industry, said Dodd-Frank’s “absence or unavailability” language only addresses temporary situations. It doesn’t control cases such as this, where the director resigns, according to Alan S. Kaplinsky, the co-leader of Ballard Spahr’s consumer financial services group, who represents CUNA on the brief.

“This language naturally connotes a temporary situation, for example, when the Director in office suffers an accident requiring long-term hospitalization,” the brief said. “It does not extend to a permanent departure from office.”

Kaplinsky discussed the brief in a Dec. 13 call with reporters and others. He was joined by CUNA Chief Advocacy Officer Ryan Donovan, who said the law is “very clear” that the president has authority to appoint an acting director to the CFPB.

‘Serious Constitutional Questions’

There’s another problem with English’s argument based on Dodd-Frank’s “absence or unavailability” language, the brief said. According to the brief, English is arguing — not explicitly, but by implication — that the director of the CFPB may resign and select a successor who could serve for an indeterminate amount of time.

According to the CUNA brief, that raises “serious constitutional questions” that go beyond even those now at issue in a separate high-profile case involving PHH Mortgage Corp. Two judges on the U.S. Court of Appeals for the District of Columbia Circuit said the CFPB’s leadership structure violated the U.S. Constitution’s separation of powers. The full D.C. Circuit is now hearing the CFPB’s appeal in that litigation, which has become one of the most-watched banking cases in recent years.

“So, Plaintiff is not `merely’ arguing that a Director who has received a Presidential nomination and Senate approval is immune to without cause termination,” the brief said, referring to the question at issue in the PHH case. “She is arguing that this same Director can effectively appoint his successor, again without any Presidential control or check. This goes well beyond the position taken by the CFPB in PHH.”

On the Dec. 13 call, Kaplinsky said that reasoning raises questions about the constitutionality of Dodd-Frank’s “absence or unavailability” section, “because it reposes even more power in the CFPB director than anybody thought he had.”

The CUNA filing is the latest brief in the case. Several were filed Dec. 11 in support of English — one by public interest and consumer advocacy groups, another by Assistant Professor Peter Conti-Brown of the Wharton School of the University of Pennsylvania, and one by attorneys general from 17 states and Washington.

Case: English v. Trump , D.D.C., 17-cv-02534, brief filed 12/12/17

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