Explaining The Consumer Financial Protection Bureau Confusion

Nov 25, 2017
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SCOTT SIMON, HOST:

On Monday morning, a couple of people could show up at the Consumer Financial Protection Bureau - both of them claiming to run it. Richard Cordray, who had been the director, stepped aside, named his interim successor. But last night, President Trump announced his own pick for acting director. And now confusion reigns.

Who else to turn to but NPR's White House correspondent Tamara Keith? Tam, thanks so much for being with us.

TAMARA KEITH, BYLINE: Glad to be with you.

SIMON: Let's remind ourselves - Consumer Financial Protection Bureau created in 2010, a independent consumer watchdog. How did it find itself at the center of this drama?

KEITH: Yes. So it was created as part of the Dodd-Frank Act and came in the wake of the financial crisis. And it has been controversial ever since its creation. It was the idea of Elizabeth Warren, now a senator, and it has been a fight every single step of the way. The financial services industry fought it, Republicans in Congress fought it and tried to block it, including for two years not confirming its first director. And their argument is that this agency can overreach and that it's unaccountable. Supporters say that that is very necessary independence. And so that's how it got...

SIMON: Yeah, the point is to be unaccountable, yes.

KEITH: Exactly. And so this is how you get this agency in the middle of this fight with its current director leaving and trying to set something up to protect it on his way out the door.

SIMON: So why is this complicated? Because directors leave agencies all the time and acting directors come in through clear lines of succession and then ultimately somebody else might be appointed. What's going on here?

KEITH: Yeah. So Richard Cordray, the Obama-era appointee, was basically trying to protect the agency. And written into its founding document - written into the Dodd-Frank law - it says that when there's a vacancy, the deputy director becomes the acting director. So Cordray named Leandra English, who had been his chief of staff, to be the deputy director as he was walking out the door. Then, a few hours later, the White House announced that the president had picked Mick Mulvaney to be the acting director. He's the White House budget director, also an outspoken critic of CFPB - basically, saying at one point along the way that he thought it should be shut down.

SIMON: Now the White House says the law's on their side.

KEITH: Of course they do. Everyone says the law is on their side. And it's a different law that they're citing. The White House is citing the Federal Vacancies Reform Act passed in 1998, which says the president can name an acting director. They say that supersedes the law that governs the Consumer Financial Protection Bureau and created it. They say that they have an opinion from the Office of Legal Counsel, which is part of the Justice Department, and that that opinion is on their side.

SIMON: So on Monday, they flip a coin or arm wrestle?

KEITH: (Laughter) The White House says that Mulvaney will show up. They expect Leandra English will also show up. It's not clear what happens after that. Though, one thing that we can be certain of is that there is going to be a legal fight. The White House is firm in its view, and consumer advocates and others are firm in their view that they need to protect it. And they feel that having Mulvaney in place would not protect the bureau.

SIMON: Tamara Keith, thanks so much.

KEITH: You're welcome. Transcript provided by NPR, Copyright NPR.