Battle for Control of Consumer Agency Heads to Court

Battle for Control of Consumer Agency Heads to Court

Battle for Control of Consumer Agency Heads to Court

The battle over who will lead the federal government’s top consumer financial watchdog agency is now headed to court.

Battle for Control of Consumer Agency Heads to Court
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The extraordinary fight, which intensified on Sunday night, adds to the uncertainty over the fate of the Consumer Financial Protection Bureau, a regulator created in the aftermath of the global financial crisis of nearly a decade ago. It encapsulates dueling visions of how the American financial system could be regulated, as President Trump moves to loosen regulation created under the Obama administration to rein in the financial industry.

Leandra English, the deputy director of the bureau who was set to become its temporary chief, filed a lawsuit late Sunday night to block Mr. Trump’s choice of someone else from taking control of the agency on Monday morning.

Mr. Trump has been seeking to install his budget director, Mick Mulvaney, as the agency’s acting director. The bureau had been a “total disaster” and needed new leadership to “bring it back to life,” Mr. Trump has said on Twitter. Mr. Mulvaney has been openly hostile to the consumer bureau, calling it a “sad, sick” joke and supporting legislation to eliminate it.

At stake is the immediate future of the consumer bureau — one of the last holdouts, within the federal government, against Mr. Trump’s efforts to strip away business regulations. While Mr. Trump can appoint his own director, confirmation could take months and slow down Republican efforts to defang the agency.

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Battle for Control of Consumer Agency Heads to Court
Battle for Control of Consumer Agency Heads to Court

Continue reading the main story
The dispute has elevated Ms. English to a national spotlight. Before her appointment, she was a low-profile career civil servant who joined the agency in its infancy and rose steadily through its ranks, serving most recently as its chief of staff. She holds degrees from New York University and the London School of Economics, and previously held senior positions at the Office of Personnel Management and the Office of Management and Budget.

The Consumer Financial Protection Bureau was created six years ago to oversee a wide variety of financial products, including mortgages, credit cards, bank accounts and student loans.

Under the leadership of Richard Cordray, the departing director, the bureau aggressively used its powers to develop new rules and punish companies that broke existing ones. It targeted abusive debt collectors and bolstered protections for mortgage borrowers. Under Mr. Cordray, it won nearly $12 billion in refunds and canceled debts for 29 million consumers.

But that put it in the cross hairs of industry critics and many Republicans, who cried overreach.

“Wall Street hates it like the devil hates holy water,” Senator Dick Durbin, an Illinois Democrat, told CNN on Sunday.

Republicans have argued that the agency under Mr. Cordray has held back growth and innovation. They have criticized how he ran the agency in dozens of appearances on Capitol Hill.

To protect the agency from political interference, Congress gave it unusual independence and autonomy. The bureau’s leader, who serves a five-year term, is one of the few federal officials the president cannot fire at will.

The current standoff was triggered by the resignation of Mr. Cordray, who abruptly stepped down on Friday. His departure came eight months before his term was scheduled to end.

Ms. English, an agency veteran, was appointed to the deputy director position hours later. In a letter, Mr. Cordray said the appointment would make her the agency’s acting director under the terms of the law that created the agency.

But Mr. Trump is citing a different federal law in his effort to appoint Mr. Mulvaney. The dueling appointments left it unclear who would be running the agency on Monday.

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BUSINESS DAY