OMB Director Mick Mulvaney

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The White House and the Consumer Financial Protection Bureau were locked in a very public showdown on Friday night over who will run the federal consumer finance watchdog, with each handpicking their own successor to lead the agency — and no one quite knowing who's going to be in charge come Monday morning when everyone turns up for work.

Richard Cordray, the bureau's first director, announced earlier on Friday that he would step down at the end of the day. At the same time, he announced chief of staff Leandra English was being promoted to deputy director, and that she would serve as acting director at once his resignation was effective at midnight Friday.

But shortly after Cordray announced his accelerated resignation and English's appointment, the White House named Mick Mulvaney, the head of the Office of Management and Budget, to serve as acting director of the CFPB.

Mulvaney will serve as the bureau's chief until a permanent director is nominated and confirmed, the White House said in a statement.

If Mulvaney's appointment stands, it would put an opponent of the CFPB's very existence at its head, similar to Environmental Protection Agency director Scott Pruitt, who sued the EPA several times when he was attorney general of Oklahoma.

"I don't like the fact that CFPB exists," Mulvaney said in a 2015 hearing when he was a Republican congressman representing South Carolina.

Much of the confusion stems from a lack of legal clarity surrounding the succession process.

Under the Federal Vacancies Reform Act, agencies can be run for up to 210 days by someone who has already been confirmed by the Senate to a different job. However, some legal scholars have argued that the statutory language establishing the CFPB ensures that its deputy director takes over as acting director until the Senate confirms a full-time director.

In a letter to CFPB staff announcing his early departure and his appointment of English to serve as deputy director and then acting director, Cordray cited section 1011(b)(5) of the Dodd-Frank Act, the law that established the bureau. This section says that the deputy director will "serve as acting director in the absence or unavailability of the director," which some have interpreted to mean that only a Senate-confirmed nominee could replace the acting director. Georgetown law Professor Adam Levitin argued that this "plain language is an express provision for a different succession."

"Leandra English is the acting director of the CFPB. She will be so until there is either a Senate confirmed appointee or a recess appointment," Levitin told BuzzFeed News Friday. "That's the right answer under the Consumer Financial Protection Act," the portion of Dodd-Frank that established the CFPB.

Levitin said that he expects English to sue to keep her job if Mulvaney attempts to lead the Bureau.

But other legal experts, including Alan Kaplinsky, an attorney at Ballard Spahr who has represented clients in front of the CFPB, argue that the Federal Vacancies Act does apply to the bureau and that Trump is free to appoint an acting director that has been Senate confirmed.

The Community Financial Services Association of America, a trade group that represents short-term, high-interest lenders that will be affected by the CFPB's new payday lending rules, called on the administration last week to appoint a temporary replacement for Cordray quickly under the Federal Vacancies Reform Act.

The CFPB did not respond to a request for comment following Mulvaney's appointment and the White House declined to comment beyond its statement announcing Mulvaney's appointment.

Under Cordray, the agency targeted a variety of lending practices, issuing new rules related to mortgages, payday loans, and other financial matters. Republicans excoriated the CFPB's rule-writing as too strict and pushed back against the agency and its director, who had announced earlier this week that he would be stepping down at the end of the month.

One of the Bureau's most aggressive opponents was Mulvaney, who served in Congress from 2011 to earlier this year, when he was confirmed to run OMB.

In 2014, Mulvaney told a trade publication, the Credit Union Times, that the CFPB was "a wonderful example of how a bureaucracy will function if it has no accountability to anybody, it turns up being a joke, and that’s what the CFPB really has been in sick, sad kind of way."

youtube.com / Via Credit Union Times

Mulvaney indicated that if he were allowed to run the Bureau, he would make it more open to the concerns of the companies it regulates.

"Financial services are the engines of American democratic capitalism," Mulvaney said in a statement Friday. "We need to let them work."

One of Mulvaney's criticisms of the Bureau from his time as a lawmaker was that it was insulated from Congressional pressure because its funding did not come from appropriations bills, but instead from the Federal Reserve.

Unlike some other regulatory agencies, which are run by a bipartisan panel of commissioners who are confirmed by the Senate, the CFPB only has a single director appointed by the president, a setup that many Republicans said gave one person too much power over consumer financial regulation.

This structure, Mulvaney told the Credit Union Times, "makes it very difficult for us to advocate on behalf of your industry, or anybody else for that matter, to the CFPB."

Now Mulvaney may be set to be invested with the authority that he once so harshly condemned — at least until someone else takes the job full-time.

While the White House hasn't put forward a full-time nominee, rumored potential nominees include Representative Jeb Hensarling, who chairs the House Financial Services Committee and who announced that he will retire in 2018; Todd Zywicki, a law professor at George Mason University and a leading conservative scholar of financial regulation; former Representative Randy Neugebauer, a Texas Republican; and the acting head of the Office of the Comptroller of the Currency, Keith Norieka.

LINK: Consumer Financial Protection Bureau Director Richard Cordray To Step Down


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