Here’s What the Turf War Over The CFPB is Really About

The author says that the CFPB operates like a fourth branch of government even though there are only three.

Richard Cordray, the immediate past Director of the Consumer Financial Protection Bureau (CFPB), set off a political firestorm.

On the Friday after Thanksgiving he announced that day would be his last as Director, he had appointed his Chief of Staff, Leandra English, as Deputy Director, and declared that she would be “Acting Director.”

Cordray did this to preempt President Trump who earlier, when Cordray first announced his intention to resign, indicated he would appoint as Acting Director, Mike Mulvaney, the bete noire of the CFPB.

The President, not one to let a challenge go answered, within hours appointed Mulvaney to that same position; and the battle was joined. Although Cordray, who wishes to gain Democratic support for a run for Governor of Ohio, is now a hero in the Democratic Party, his political stunt has done further damage to an already wounded agency.

This summer, he was slapped down by a DC Circuit of Appeals panel that held his single-Director position unconstitutional, calling it a “threat to individual liberty.” That decision is pending review by the full court.

For the past few days, the CFPB suffered the legal impossibility of two Acting Directors until a Federal Judge stepped in and removed English. English had filed a lawsuit late Sunday night requesting Mulvaney be stopped from assuming the Acting Director position and that she be declared the “rightful Acting Director.”

She took the incongruous position that even though the President has the power to appoint a Director, upon the advice and consent of the US Senate, he lacks the power to appoint an Acting Director.

Cordray and English wanted the power to name their own successor, at least temporarily, and deny the President his right to do so. But, in America, the people are not governed by unelected bureaucrats. We govern ourselves through our elected representatives, including most importantly, the President, who is the chief officer of the Executive Branch.

The President claimed the Federal Vacancies Reform Act provided him the authority to appoint an Acting Director in the case of vacancy. The Justice Department supported the President’s position. The General Counsel to the CFPB agreed with the President as well.

That former Director Cordray and Deputy Director English attempted to effectuate a coup and have English take control of that Bureau away from the President should be of concern to all Americans.

Created in 2011 by then President Barack Obama, the CFPB is the brainchild of Elizabeth Warren, a Democratic US Senator from Massachusetts. Warren designed the CFPB to exist to the extent possible outside the three branches of government created by the US Constitution. And, she succeeded. The CFPB is without parallel in the federal government for its near unlimited and unchecked power.

The Director has the power to decide what laws to enforce, against whom to enforce them, and what sanctions and penalties to impose. Although the enabling Act places the CFPB in the Executive Branch it also refers to it oxymoronically as an “independent bureau.” This permits the Bureau to promulgate its own rules not subject to the cost-benefit analysis requirement like other Executive Branch agencies. The CFPB does not even have to ask Congress for funding; it receives its funding from the Federal Reserve, which just borrows or prints the money and gives it to the CFPB.

It’s like the CFPB is a 4th branch of government. But our government has only three. No agency is permitted by the Constitution to be as Warren, Cordray and English would say, “beyond politics” (i.e. beyond our tripartite system of government). I tried to explain their position to my beautiful, 8-year-old daughter, Julia Marie Scaringi, currently in the 2nd grade at Camp Hill Elementary School. She replied, “But Daddy, there are only three branches of government – the Executive, the Legislative and the Judicial” as she pointed to her painting of the tree with those three branches on our refrigerator door. She’s right of course.

Regrettably, Cordray, English and Warren have been playing politics with this important federal Bureau, its 1600 employees and the thousands of businesses large and small that it regulates.

Just about the entire country waited with bated breath over the past couple of days as the Dueling Directors fought it out. Tellingly on the first day on the job Mulvaney went the CFPB headquarters began reading the operations manuals, meeting with its leadership and issuing orders. English? She went to Congress to hold a press conference with Democratic Senators, including Elizabeth Warren.

Thankfully U.S. District Judge Timothy J. Kelly put an end to this charade by denying English’s request, thus confirming President Trump’s appointee as Acting Director.

Mulvaney once sarcastically referred to the CFPB as a “wonderful example of how a bureaucracy will function if it has no accountability to anybody.”

Cordray’s stunt, English’s lawsuit and Warren’s cheering them on prove his point. Let’s hope Acting Director Mulvaney acts quickly to rein-in the CFPB and makes sure it no longer escapes the checks and balances of our Constitutional Republic.

As seen on and in The Patriot-News

Marc A. Scaringi, Esq. is an accomplished attorney, political pundit, columnist, and recognized public speaker. His firm, Scaringi Law, represents individual, family, and business clients in virtually every area of law. Attorney Scaringi focuses his practice on Business Law, Administrative, Campaign and Election Law and Government Relations.

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