Corporate Accountability

Dodd, Frank, Waters Say the Fight for the CFPB Isn’t Over

By Alex Spanko

The original lawmakers behind the Dodd-Frank Act — along with Rep. Maxine Waters, one of the law’s biggest cheerleaders — vowed that the fight over the Consumer Financial Protection Bureau’s director isn’t over.

Former Sen. Christopher Dodd and former Rep. Barney Frank, the Democratic leaders who helped usher the financial reform package through Congress back in 2010, laid out a case for the media Thursday for their preferred candidate after a leadership tangle that left two acting directors of the agency — one designated by the president and the other named by outgoing director Richard Cordray last week.

“I think, despite the fact that we have gone to court, that the issue has not been determined on its merits,” Waters, a California Democrat, said on a conference call with the former lawmakers and other allies.

Quick recap

The fast-moving controversy at the bureau reached a temporary stopping point on Tuesday, when a federal judge sided with President Trump and threw out Leanne English’s challenge to Trump’s preferred nominee, Office of Management and Budget director Mick Mulvaney.

In short, the two sides are sparring over the line of succession at the CFPB, which has never before been tested since Dodd-Frank created the bureau: Cordray, who stepped down over the Thanksgiving holiday, was its first and only director. Before he left, he named English his deputy director, which is entitled to serve as acting director in the “absence or unavailability” of the leader.

But President Trump and his allies have argued that the phrase doesn’t apply to a resignation, and invoked another statute — the Federal Vacancies Reform Act of 1998 — to designate Mulvaney as Cordray’s acting successor until a new nominee can go through the Senate confirmation process.

Fight plows ahead

Much has been made of the meaning of the “absence or unavailability” phrase, but Dodd, Frank, and CFPB legal architect Michael Barr insisted the language was meant to apply to the change of power — thus making English the rightful heir to the throne.

“That was our intent, without any question,” Dodd said on the call, which was arranged by the Progressive Change Institute, a left-leaning grassroots political organization.

“It was clear to us, and it was clear to Chairman Dodd’s team, and it was clear to the Senate when they passed this, that this would apply to succession,” said Barr, who was the Treasury Department’s assistant secretary for financial institutions while the original law was crafted.

Further complicating the issue, the judge’s decision to throw out English’s request for a restraining order didn’t end the controversy: Both sides will draft briefs over the coming days regarding the actual law and not just a temporary stay, according to Brianne Gorod, chief counsel for the Constitutional Accountability Center.

“We’re at the very beginning of this litigation, and not the end,” Gorod said.

Meaning behind the words

The fight may have devolved into an arcane battle over language, but both sides view it as a struggle for the soul of the bureau — and the results could have a long-standing effect on both the direction of the department today and in the future.

“Mick Mulvaney is a very honest guy, and as long as he’s the director of the agency, he will do almost nothing,” Frank said, referencing the acting director’s long-standing objections to the CFPB and its mission.

Mulvaney has already frozen the bureau’s hiring and all new rulemaking for 30 days, and halted the CFPB’s ability to disburse civil penalty payments.

Frank characterized the president’s move as a way to for the GOP to kneecap the bureau without gutting it entirely through the legislative process, calling the CFPB’s mission popular among consumers.

“I don’t think they want to go up to their voters and say: I helped Wells Fargo over the average depositor,” he said.

But some experts have questioned just how much influence the director alone can have over the agency’s work — especially since it consists primarily of Obama-era appointees outside of Mulvaney — and others have wondered whether allowing outgoing CFPB directors to hand-pick their successors would strip the president of the power to appoint independent leaders. Put another way, the power struggle could conceivably backfire on the Democrats if they find themselves back in control of the White House with a Republican-appointed CFPB director.

Both Frank and Waters rejected the latter notion on the Thursday call, with Frank noting that the bill was crafted during the first term of a Democratic president they hoped to see serve for another.

“It is important to give that agency some independence from any political operation,” Frank said, also pointing out that his colleagues certainly didn’t imagine a Donald Trump presidency back in 2010.

Waters agreed, saying the intent of their succession plan was to ensure that a competent, independent deputy would take over outside of the political process.

“The main concern about creating this very important bureau — to give consumers some protection and someone looking out for them — is independence,” she said.