Dodd and Frank join CFPB debate

Author: John Crabb | Published: 4 Dec 2017
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Senator Chris Dodd and Congressman Barney Frank have entered the debate over who is the rightful acting director of the Consumer Financial Protection Bureau (CFPB). They have argued that the original wording of the legislation that created the agency rejects the Vacancies Reform Act (VRA) and that President Trump is not permitted to pick and choose who should fill the role.

Earlier this month Director Richard Cordray, who was appointed to fill the Obama-era initiative from its inception, resigned from the post. On his way out he assigned long time staffer Leandra English as his successor to temporarily run the bureau until a permanent replacement was made. At the same time however President Donald Trump appointed White House insider and Director of the Office of Management (OMB) and Budget Mick Mulvaney to the position, citing the VRA.

"The CFPB statute clearly rejects the Vacancies Reform Act"

“Unless legislative history is no longer of any value, and unless that is no longer the case in certain quarters, it was a very clear intent,” said Senator Dodd at a press conference on November 30. “The legislative history will reflect that after considering the Vacancies Act, the choice was made that the director would appoint a temporary director who would be a professional within the bureau who is committed to protect the agencies and consumers of financial services.”. 

He continued: “That was our intent without any question. We had the choice of keeping the Vacancies Act but we rejected that choice and wrote the language which is in the bill. Barney Frank and I, along with our colleagues in the House and the Senate, along with President Obama, did not just call the CFPB an independent agency - we created an independent agency.”


  • Senator Chris Dodd and Congressman Barney Frank have entered the debate over who is the rightful acting director of the CFPB, suggesting that the original intent of the legislation was clear in stating the law of succession;
  • Obama appointee Director Richard Cordray resigned from his post earlier this month sparking a legal debate as to whether the CFPB’s Deputy Director, Leandra English, or Trump appointed OMB Director Mick Mulvaney is the rightful temporary leader of the bureau;
  • Dodd, Frank and others suggest that the Vacancies Act does not apply in this situation, while Trump and the DC courts have suggested otherwise;
  • Democrats and supporters of consumer protection are concerned that Mulvaney, outwardly antagonistic towards the CFPB, could sit in perpetuity in the role and diminish its effectiveness and authority.

The VRA stipulates that the president may appoint a replacement to fill a vacant executive position, until a permanent replacement can be confirmed by the Senate. However, the act is only the exclusive means of appointment if there not another statute in place that states the order of succession.

Michael Barr, professor at Michigan Law who served as the US Department of the Treasury's assistant secretary for financial institutions, and was heavily involved in the drafting of Dodd-Frank, confirmed that the CFPB statute clearly rejected the act.

“It was clear to us, and it was clear to Chairman Dodd’s team and the Senate, that this provision would apply with respect to succession and not the Vacancy Act,” he said. “It was consistent with the structure and the text of the act that the Senate passed and then the full Congress adopted.”

“It would be hard to find a clearer explanation of exactly what Congress intended, or a clearer legislative history on this kind of question,” he added. “The law is quite clear.”

Despite this, the appointment of English by Cordray was rejected by Timothy Kelly, the Trump appointed District Court Judge for Washington DC, earlier this week. The court concluded that the statutory right of the president to temporarily fill a vacancy in an executive agency when an officer resigns supersedes the statutory right of the CFPB director to appoint a deputy director to serve as acting director in the absence or unavailability of the director.

Larry Platt, partner at Mayer Brown, suggested that this ruling is not surprising.

“An alternative reading effectively would treat the CFPB directorship as a property right that an outgoing director temporarily could transfer to whomever he or she pleases, which sounds more like royalty in England than executive agencies in the United States,” he said.

Dodd called on the President to nominate a permanent director to replace Cordray as soon as possible to be considered by the Senate, but is not entirely hopeful. “I am very fearful that what will happen here is that we will find this acting director, Congressman Mulvaney, will be there in perpetuity until another president appoints someone else - which would be a mistake,” he said.

Dodd, Frank, Waters and Barr were instrumental in passing the Wall Street Reform Act

“The congressman has been very clear, honest and straightforward - he wants to get rid of the CFPB and he wants to get rid of the underlying legislation,” he added. “The idea that we would appoint or have a temporary director who may be there for a long time who is vehemently opposed to this agency, and vehemently opposed to this bill of course does a great disservice.”

Congressman Frank hastened to add that nobody is denying that the president has the right to nominate a new director to fill the vacancy, going as far as to say that he wishes he would. “I think in this situation a nominee that is opposed to the very notion of the consumer protection and independent agency as Mick Mulvaney is, couldn’t get confirmed,” he said.

Not only would all 48 democrats vote no, outlined Frank, Susan Collins initially voted for this bill, Senator Bob Corker came up with the idea among others of putting it there in the first place, and there are a number of Republican senators running for re-election.

“I don’t think they want to go up before their voters saying 'you know what, I helped Wells Fargo against the average depositor,’ so this is a very critical issue and what we are seeing here, yes, the president can appoint a new director and subject that director to the confirmation process,” said Frank.

“But until that is completed he cannot simply appoint someone, despite what the law says, to run the agency who is totally opposed to it.”

Congresswoman Maxine Waters, who was also present in the room during the Dodd-Frank negotiations, stressed that despite the court decision – the fight is far from over.

“Despite the fact that we have gone to court, and that the issue has not been determined on its merit, we should do everything possible to make sure that the court understands the legislative intent,” she said.

“I am in the process of organising the consumer activists so that we can come together, and everybody can understand what legislative intent is and was, and then we can push back as hard as we can to make sure that the law is followed.”

Regardless of the outcome it is fairly clear that that agency is one that has attracted great focus from the administration, said David Lopez, partner at Cleary Gottlieb. “Even if the issues were to go away today or tomorrow with respect to who heads that agency, I think you will see enormous pressure to limit the scope of regulatory influence that the agency has.”

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