WASHINGTON: The power struggle that rages on at the top of a key consumer protection agency, underscores US President Donald Trump’s efforts to rein in financial regulation.
“Shootout at the CFPB corral,” read the headline on a Washington Post opinion column about the battle for control at the Consumer Financial Protection Bureau. The independent agency, created during the Obama administration in the wake of the 2008 financial crisis, polices banks, debt collectors, payday lenders and investment firms, to protect consumer rights.
It has been under fire constantly from Republicans, and Trump has promised to roll back regulations across the economy that he says have hindered lending and business activity.
CFPB director Richard Cordray, a Democrat, stepped down Friday and appointed his chief of staff, Leandra English, as deputy director, thereby allowing her to take over the helm of the agency until a new director was appointed, as specified in the Dodd-Frank Wall Street reform act that created the agency.
But the same day President Donald Trump named his own ultra-conservative budget director, Mick Mulvaney, a sharp critic of the agency, as its interim director.
In response, English filed a lawsuit on Sunday to block Mulvaney from taking up his post, arguing that she is the legitimate interim leader of the bureau.
Both officials showed up to work on Monday morning, asserting control of the agency in emails to staff, each signing them as “acting director.”
Since its creation, the CFPB has faced the antagonism of lawmakers in Trump’s Republican party and from industry groups, including Mulvaney, who as congressman said the agency was a “joke” that he wished didn’t exist.
The agency is perhaps most famous for leading the charge against commercial banking giant Wells Fargo, which created millions of phony bank and credit card accounts that resulted in untold sums in fees for customers, damaged credit scores and higher interest rates.
As the battle for leadership of the agency broke out, lawmakers on both sides of the aisle decried what they said was a scandal.
“All Americans should be deeply concerned about the White House’s cynical decision to flout the law and attempt to put the ringleader of its dangerous, anti-consumer protection policies in charge of the CFPB,” said Nancy Pelosi, leader of the opposition Democrats in the House of Representatives.
Republican Senator Tom Cotton, a member of the Senate Banking Committee, fired back, calling the bureau a “rogue, unconstitutional agency” and urging Trump to fire English “immediately.”
The White House on Monday cited friendly opinions from the Justice Department and the CFPB’s own chief counsel, saying Mulvaney was the rightful acting director.
“It is unfortunate that Mr. Cordray decided to put his political ambition above the interests of consumers with this stunt,” White House Press Secretary Sarah Sanders said.
The dispute comes just as the Trump administration is beginning to hit its stride in reshaping financial oversight to its liking with leadership changes at several key institutions.
On Monday, Joseph Otting, a banking executive, was due to be sworn in as head of the Office of the Comptroller of the Currency, a bank regulator. And Trump’s nominee for chair of the Federal Reserve, Jerome Powell, will testify at his Senate confirmation hearing on Tuesday.
Powell, a centrist Republican, current Fed governor and former investment banker, is expected to sail through the process and to take up his position in early February once the term of current chair, Janet Yellen, ends.
The question of the CFPB’s leadership is highly likely to come up during Powell’s testimony.
With Yellen’s departure, Trump has a free hand to name the majority of the seven members of the Federal Reserve Board, a body with a central role in banking oversight and regulation. AFP