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The Battle of the CFPB
While everyone was sleeping off their turkey hangovers on Friday, high drama was going down in DC. That’s when the director of the Consumer Financial Protection Bureau, Richard Cordray, stepped down from his position. On his way out the door, he named CFPB Chief of Staff Leandra English as deputy director, intending that she would be acting director.
President Trump, of course, had other ideas. He named White House Budget Director Mick Mulvaney, a CFPB critic, to be interim director until a replacement is nominated and approved by the Senate.
So who is in charge? Depends who you ask. Democrats say it should be English. The text of the law says that the “deputy director shall be appointed by the director; and serve as acting director in the absence or unavailability of the director.” The Trump administration disagrees. They say the 1998 Federal Vacancies Reform Act gives Trump the power to make temporary appointments to agencies like this.
Where does that leave us? Don’t you know already? In court, of course. Yesterday, English filed suit to prevent Mulvaney’s appointment. This isn’t a minor dispute over who will plan the office Christmas party. It could take months for a new CFPB director to be nominated and approved by the Senate. And this isn’t some penny ante bureau either. The CFPB is very powerful and extremely controversial.
Why? Well, the CFPB is an independent agency, but it’s structured differently from other independent agencies. Typically an independent agency is run by a commission of five members, no more than three from the same party. The idea is that they provide an internal check on one another.
The CFPB isn’t like that. It’s run by a single director, rather than a commission, and that director can’t be fired except for cause. And unlike other agencies, it gets its funding from the Federal Reserve, not Congress. That means it’s not accountable to either Congress or the President.
This was done by design. The CFPB was meant to be protected from political interference. And having the agency run by a single director means that he or she can act more quickly. The downside, of course, is the traditional one: Having one person in charge, without checks to his or her power, tends not to work out well. (Which is why this setup has been the subject of several legal challenges.)
Published in Domestic Policy
Read literally that means there must be a director for the deputy director to serve as acting director. If there is no director, the director is neither absent nor unavailable. There is no director to be absent or unavailable. She can be deputy director and serve as acting director once an interim director has been appointed by the President.
I’d say Trump is on pretty solid ground here. He can appoint an interim director in the absence of a permanent, confirmed director per the Federal Vacancies Reform Act. Leandra English as deputy director, can serve as acting director in the absence or unavailability of the interim director.
Seawriter
You forgot to mention that the CFPB was proposed by Elizabeth Warren, passed under Dodd-Frank, and opened shop under President Obama in 2011, as if any of these Democrats who purposely structured the agency without accountability believe in the balance of powers.
I’m thinkin’ they were pretty confident of one party rule for the CFPB director at that point. The Left is notorious for first order thinking.
Right. And Warren was the first director.
That this was Warren’s baby, and that it’s structures this way, should give anyone who supports her pause about the idea of electing her president.
The CFPD is designed to let the director rule with an iron fist and no checks or accountability.
My concern is that there’s going to now be a grand political battle over who gets to be director, which completely misses the forest for the trees.
The battle should instead be over reforming (or abolishing!) the thing, rather than a war over who gets to be in charge. I strongly suspect that Trump will go to the mattresses over the directorship and that will suck up all the political energy and reform (which is far less sexy) will never happen.
Reforming (or abolishing) an agency is a matter of legislation. Legislation is the job of Congress. It is nice to have Trump to blame for a failure to reform this agency (better still abolish it), but even a nanosecond of reflection should make it apparent that Congress – especially this Congress – will do absolutely nothing to reform the CFPB. As someone noted reform isn’t sexy. It means legislators might have to do something. It means John McCain, Lisa Murkowski, Susan Collins, and others have behave like grown-ups and pass on a chance to bash Trump.
It’s Not. Gonna. Happen. Not with this Congress, and especially not with this Senate.
Given that what should a President do under these circumstances? (Pretend the President’s last name isn’t Trump. I know it’s hard, but try.) Knuckle under to an administrative state power grab or push back? (And since Congress is going to do nothing, asking Congress pretty please abolish the CFPB is knuckling under.)
Seawriter
Heh. Funny. As if Warren’s supporters would care about stuff like this.
The normal thing: Be a leader.
Use this opportunity to point out the illiberal and anti-republican nature of the CFPD, and call for reform.
That would require a president with:
1. At least minimal leadership skills
2. Some basic understanding of policy or the willingness to learn
3. A commitment, however minor, to limited government
4. Commitment to (small-r) republican principles
So, in other words, ya got nothin. Okay. Works for me.
Seawriter
Wikipedia: The Financial CHOICE Act, proposed by House Financial Services Committee, Jeb Hensarling to repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act, passed the House on June 8, 2017. In June 2017, the Senate was crafting its own reform bill.
It’s always the damned Senate. But, just for grins, let’s say Congress passes a DF repeal and puts it on Trump’s desk. You think he wouldn’t sign it, Fred? Nonsense. You’re letting your Trump hatred color your analysis.
Not at all.
First, “Trump hatred” is too often used as an excuse for a piss-poor argument. Hatred doesn’t enter into it. Just because I see through Donald Trump’s conman act and refuse to cherish and praise his benevolence, doesn’t mean I hate him.
Second, wow, it’s great that bill passed the House. Imagine what could be accomplished of the President spoke in favor of the bill. Instead he spends him time tweeting about the NFL and picking fights with gold star mothers.
“Cherish and praise his benevolence.” No hyperbole there.
Just for grins, let’s say I win the lottery without ever buying a ticket.
The odds are about the same as the Senate doing anything constructive.
I think the Dodd-Frank should be repealed. Its a bad law. Crafted in response to the 2008 financial crisis, it doesnt actually address any of the issues that caused the financial crisis.
Rating agencies are still out there – freelancing paid endorsement of securities – just as they had before. To my way of thinking, this was the #1 cause of the financial crisis. IF the Mortgage Backed Securities had been accurately rated, they would not have been as financial successful for the issuers, and thus would not have been as damaging when they failed.
I think the best financial reform that could be made, is to have the rating agency put some skin on their rating. They seem to be somehow immune from the liability for rating trash as triple-A.
Turns out President Trump can tweet and restrain the administrative state at the same time. But, wow, just keep complaining about him. Have you gotten that list of piss-poor policies and appointments together yet? Still waiting.
Putting skin in the game would be one method of creating accountability, but there still needs to be some independency between the ratings firms and issuers. If I remember right (it’s been a while since I studied the ’08 collapse) there was some incentive to pad the ratings due to risk of losing the issuers’ business. In other words, if the issuer didn’t like the rating, they could shop around the MBS until they got a rating they liked.
Feel free to correct my memory if that’s not correct.
Why do I feel like a high school girl reading Atlas Shrugged.
Most of government needs to go.
Would any R president other than Cruz/Paul even consider fighting this latest swamp creature? Would they ever stand a chance of winning a battle vs their corrupt evil disgusting colleagues in the senate?
How I would love to have a filter on Ricochet that hides all the repetitious (ad nauseum) posts about how horrible Trump is – and all the posts about his perfections – which contribute zero, zilch, nada to the conversation.
High school girls (and boys) don’t read Atlas Shrugged anymore (no pictures). Well, maybe yours.
To the rest, AMEN and AMEN.
Of course, even winning the battle in the legislative and executive branch is meaningless. The real power is in the Judicial branch – even some lowly district court can have more impact on how the nation is run than any number of Senators.
I thought we used to have a blocking feature here. What happened to it?
Which is why the left is panicking.
I never knew it was there, but if it is, I can’t find it now: Anyhow, it would have to be pretty sophisticated. So I suppose this is just my whining.
Me, too! (Probably for different reasons, though.)
My recollection is that at the time the Democrats did not shy away from the argument that the agency had a lack of accountability, and argued that was a benefit, using their usual line that all government bureaucrats act only with the purest of motives (and I would say most effective of results, but Democrats haven’t been particularly interested in looking at effects). Yes, the Left does tend to think only of first order effects, which is why looking at long-term results doesn’t go so well for them.
It seems to me that other than on trade, Trump does have a commitment to limited government. He has been rolling back regulations faster than anyone since Reagan, he has been appointing judges with sterling records for constitutional adherence, and he has been appointing critics and smaller government activists to head the various regulatory agencies. How can you not like that?
Trump’s hands are tied on the CFPB, except in one way – he can try to appoint a new director. That’s what he’s trying to do, and the person he wants to run the agency would just as soon shut it down. I think that’s about the best a limited government believer can hope for given the state of DC politics today.
No, you’re essentially correct, but in the end the agencies where not even examining the mortgages bundled into each security. In essence they took the issuers word for it, and for a fee stamped a rating on the security that had not been examined.
To my mind this is fraud and should’ve been prosecuted or at least litigated. But as far as I know the rating agencies had not been called to task, nor have their business practices been forced to change.
Okay, so, except for that massive part of the US economy, he’s committed to limited to limited government?
Look, I know he repeats this claim all the time, but as with most of his claims, it’s probably bull [expletive]. I’m sure he’s doing something about regulations, but his specific claim is hard to prove because there isn’t one clear measure of it. In other words, he asserted it without evidence.
Yeah, he’s also not been appointing people to positions. That sounds like it might help the cause of limited government, but it actually does the opposite. It jams up the works, and when government functions poorly, it causes people to demand more government, not less.
Look, I’m sorry, but a guy who ran on trade protectionism, immigration restrictionism, and not cutting entitlements ever, and whose business history is one of using government to get what he wants, can’t be said to have a commitment to limited government.
From the article:
Ahahahahaa!! “Judicial diversity.” Ahahahahahaaa!
Heh. This is excellent.
Mick Mulvaney Just Savaged The CFPB In His First Press Conference As Director
‘I’m just learning about the powers that I have as acting director. They would frighten most of you.’