Judges Question Trump’s Choice of Mulvaney to Lead the CFPB

By Evan Weinberger

A pair of federal appellate judges on April 12 called into question the appointment of Mick Mulvaney to serve as the Consumer Financial Protection Bureau’s acting director, but raised doubts whether the bureau official challenging his appointment had a valid claim to the position.Judges Patricia A. Millett and Judith W. Rogers were part of a three-judge panel of U.S. Court of Appeals for the District of Columbia that heard oral arguments in a case launched by CFPB Deputy Director Leandra English challenging President Donald Trump’s choice of Mulvaney, the Office of Management and Budget chief, to serve as the bureau’s acting director late last year.English argued that the Dodd-Frank Act, which created the CFPB, expressly provides that she should serve as the acting director, and supplants the Federal Vacancies Reform Act, a 1998 law that Trump used to appoint Mulvaney.

Former CFPB Director Richard Cordray promoted English, then the bureau’s chief of staff, to serve as acting director just hours before he officially resigned Nov. 24. Trump appointed Mulvaney hours later.

English subsequently sought a preliminary injunction blocking Mulvaney’s appointment, which was denied in January. The panel did not appear receptive to that argument, challenging English’s standing to bring that case and her reading of the statute. And even if her arguments on whether Dodd-Frank or the Federal Vacancies Reform Act were to prevail in the litigation, the for-cause removal protection that the 2010 financial reform law provides to the CFPB director does not apply to the deputy or acting director, Millett said. “If she doesn’t get for-cause removal, you lose, don’t you?” Millett said to English’s attorney, Deepak Gupta of Gupta Wessler PLLC.

Judge Thomas W. Griffith, the third judge on the panel, appeared to agree with his colleagues’ reading of the president’s power to appoint acting agency directors under the Federal Vacancies Reform Act. In particular, he challenged English’s ability to get an injunction against the president that would block Mulvaney’s appointment.

“Unless you can enjoin the president here, I don’t see how she gets her relief,” Griffith said.

Threat to CFPB Independence?

Millett and Rogers, both Democratic appointees, expressed concerns that Mulvaney, who works out of the White House, would limit the independence of the CFPB and violate a provision in Dodd-Frank that shields the bureau from having the budget office review its actions.Dodd-Frank states that the CFPB does not have to run its budget and regulations by the OMB, and has other safeguards in place to prevent the White House from influencing the independent agency.Having Mulvaney wearing the hats of both OMB and acting CFPB director would necessarily violate that provision, Millett said. “The end result of appointing Mr. Mulvaney is that everything the CFPB director decides is going to be approved by the OMB director,” she said to Hashim M. Mooppan, the Justice Department attorney representing Mulvaney. Millett and Rogers both appeared to side with the idea of allowing the president to choose the acting CFPB director, but demurred when Mooppan appeared to assert that that could be done even if it violates the Dodd-Frank provisions aimed at shielding the CFPB from the budget office. “That would be contradicting the statute. That would violate the statute,” Millett said.

Griffith did not weigh in on the issue of CFPB independence.

The arguments did little to end questions about the path forward for the CFPB. The court could rule against English on her claims to lead the bureau, and against the choice of Mulvaney to be in charge until a permanent replacement is named.

The case is: English v. Trump , D.C. Cir., No. 18-5007, oral arguments 4/12/18 .

To contact the reporter on this story: Evan Weinberger at eweinberger@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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