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Uncertainty at the agency Elizabeth Warren helped create

Leandra English, who served as deputy director of the Consumer Financial Protection Bureau and says she is the rightful acting director of the agency, met Monday with Senators Chuck Schumer and Elizabeth Warren on Capitol Hill.
Leandra English, who served as deputy director of the Consumer Financial Protection Bureau and says she is the rightful acting director of the agency, met Monday with Senators Chuck Schumer and Elizabeth Warren on Capitol Hill.Michael Reynolds/EPA/Shutterstock

WASHINGTON — Employees at the Consumer Financial Protection Bureau returned to work after Thanksgiving break Monday to an unusual scenario: They had two bosses, separated by an ideological gulf, who were battling in court to lead them.

In what could have made a decent reality TV plot dreamed up by Donald Trump in his previous jobs on the small screen, the president dispatched his budget director, Mick Mulvaney, to take control of the independent agency as acting head after the departure of its former chief, Richard Cordray.

But Cordray’s handpicked successor, Leandra English, the bureau’s former deputy director, was not giving up the reins and went to court Sunday night to block Trump’s move.

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The result: uncertainty, paralysis, and a media frenzy around the relatively obscure agency, including dueling e-mails to employees from both of their new bosses, which each signed “acting director.”

In his message, Mulvaney instructed the staff to ignore any directives from English. He also invited staff to sample the Dunkin’ Donuts he personally brought into the agency in a brown bag, for his first day in the job.

The surreal atmosphere was the latest outcome of a long fight waged by Trump and Republicans against the bureau, which was created by Congress in 2010 after the 2008 mortgage-fueled Wall Street meltdown.

The bureau investigates and levies penalties against companies that abuse consumers through unfair mortgages, student loans, bank accounts, and other financial products.

The agency was the idea of Elizabeth Warren before she was the Democratic senator from Massachusetts. And she set up the agency as a special Obama administration adviser before she was passed over by President Obama for the nomination to lead the agency.

As senator, Warren has remained the bureau’s fiercest defender on Capitol Hill. English went to the Senate on Monday and met behind closed doors with Warren and Senate minority leader Chuck Schumer, highlighting the partisan battle lines that have made the agency one of Washington’s biggest political pinatas since its inception.

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“President Trump is creating chaos everywhere he goes, and now he’s trying to bring that chaos to the consumer agency,” Warren said in a phone interview. “I hope that all the employees put their heads down and keep doing their jobs.”

English is a career civil servant who has held several senior leadership positions in the bureau’s six-year history. Mulvaney, a former Republican member of the House Financial Services Committee, said in Monday’s news conference that the agency is an “awful example of a bureaucracy that has gone wrong.”

Mulvaney announced Monday he would implement a 30-day hiring freeze and a freeze on any new regulations and civil penalty payments. Still, he tried to assuage concerns that he was sent to hamstring the agency.

“Rumors that I’m going to set the place on fire, or blow it up, or lock the doors are completely false,” Mulvaney told reporters.

At the same time, Mulvaney is running the Office of Management and Budget — one of the most powerful arms of the White House.

Outside its gray concrete office near the White House, the bureau was getting some rare time in the spotlight. A handful of television cameras were fixed on its front door, while staffers repeatedly shrugged off reporters’ questions and a security guard screened who could enter.

The dispute over the agency’s future — and Senator Warren — seemed to be on Trump’s mind Monday at the White House. He was hosting elderly Navajo code talkers from World War II when he gratuitously took a shot at Warren, using his favorite derogatory nickname for her.

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“We have a representative in Congress who they say was here a long time ago. They call her Pocahontas,” Trump said, to stunned silence and bewildered looks on the faces of his Native American guests.

Warren shot back on TV. “It is deeply unfortunate that the president of the United States cannot even make it through a ceremony honoring these heroes without having to throw out a racial slur,” Warren said on MSNBC.

The battle over who will take the helm of the agency may have to be decided in US District Court. The parties to the case are arguing over two laws that seem to conflict on the crucial question of how to fill a temporary vacancy at the top of the agency, pending confirmation of a new, permanent presidential nominee.

Barney Frank, a former Massachusetts representative who cosponsored the 2010 Dodd-Frank bill that established the bureau, told the Globe his legislation intentionally crafted rules of succession so that the director’s position would be shielded from excesses of executive power.

According to the law, the deputy director takes over in the event of the absence of the director, who serves a five-year term.

Cordray was not scheduled to end his term until next July, but he left his role as director on Friday, promoting English to the position of deputy director to ensure she would take his place when he left.

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“You want to make sure that decisions about banking regulation are not going to be individually influenced by the fear that somebody’s going to be fired,” Frank said in a phone interview. “It was part of a deliberate decision to insulate this agency from normal political control.”

The Trump administration contends that a different law takes precedent. White House press secretary Sarah Huckabee Sanders said Monday the Federal Vacancies Reform Act, passed in 1998, establishes the president’s authority to make appointments to the bureau.

In response to the position that the decades-old law should take precedent, Frank said he recognized that this is an “arguable issue.”

“What we did was unusual, I acknowledge that,” he said, referring to the rules for succession in the Dodd-Frank legislation.

On Saturday, Trump himself had weighed in on Twitter, called the bureau a “total disaster” and said his administration would “bring it back to life.”

In a July speech, Cordray said the bureau has returned $12 billion to more than 29 million people targeted by unlawful practices.

The Justice Department’s Office of Legal Counsel and the bureau’s own general counsel released their own statements siding with the president. The Justice Department’s memo, signed by assistant attorney general Steven Engel, said authority under the 1998 law remains an available option to the president even if a statute exists offering other succession rules.

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US District Judge Timothy J. Kelly held an emergency hearing on the case but declined to rule immediately.

Harvard law professor Howell Jackson, who worked for two years at the bureau as a visiting scholar, said both legal arguments on who can appoint a successor could be considered credible.

But until a final determination is made in court, Jackson said, the agency’s work will be disrupted.

“I’m sure it’s confusing for the people who work there,” he said. “And it will complicate any actions that are taken until the controversy resolves.”


Julia Jacobs can be reached at julia.jacobs@globe.com. Follow her on Twitter @juliarebeccaj.