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Leadership Dispute At Consumer Financial Protection Bureau Stirs A Legal Battle


We're going to start the program hearing about a remarkable political standoff in a year that has seen many unprecedented moments. It's a fight over who will lead an agency called the Consumer Financial Protection Bureau. That's the agency created in the aftermath of the financial crisis to protect consumers in their dealings with financial institutions - everything from credit cards to mortgages to student loans.

On Friday, the outgoing director, Richard Cordray, stepped down and appointed his chief of staff, Leandra English, to run the agency temporarily. Later Friday evening, President Trump announced that White House Budget Director Mick Mulvaney would be taking over the job as acting director. The selection of Mr. Mulvaney to run the agency has alarmed consumer advocates because he has made no secret of his hostility toward the CFPB.


MICK MULVANEY: It's 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 a sick, sad kind of way.

MARTIN: And President Trump tweeted today, quote, "The Consumer Financial Protection Bureau or CFPB has been a total disaster as run by the previous administration's pick," unquote. All this sets up a showdown for Monday when both Mulvaney and English are expected to show up for work. Now, the administration has defended the president's decision, telling reporters that the White House has the power to fill top agency vacancies under the so-called Federal Vacancies Reform Act.

So for more perspective, we called one of the architects of the law which created the CFPB, the Dodd-Frank Act, to find out what lawmakers had in mind. We reached Barney Frank, former Democratic congressman from Massachusetts. And we reached him in New York. Congressman, thanks so much for joining us.

BARNEY FRANK: You're welcome.

MARTIN: So as we said, the White House says that they have the authority here. What is your perspective on this?

FRANK: Namely, that if we wanted the Vacancy Act to govern, we would not have done anything about it. Knowing that the Vacancy Act was the law, we very specifically came up with a different way of acting, and it was not an accident. The Consumer Financial Protection Bureau is given a great deal of autonomy. You heard Mr. Mulvaney complaining about it. He calls it a lack of accountability. What we think it is is a way to kind of prevent an agency from political pressures, which we know are going to be enormous on an agency that is challenging some of the most important financial interests in the country.

The director of the Consumer Financial Bureau is different than every other in many ways. He's appointed or she's appointed for a five-year term and cannot be removed by the president. So what you have here is a conscious decision to give the Consumer Financial Protection Bureau more independence from the kind of political pressures that will come because, remember, the Consumer Financial Protection Bureau - what it does is to protect people against kind of aggression from private interests. And we thought it was appropriate that, in that case, they be protected from being cut off at the knees politically.

MARTIN: So I understand that you don't have a copy of the statute in front of you. But...

FRANK: No, I forgot my copy. I usually travel with one...

MARTIN: I'm sure you do.

FRANK: ...But I left it at home.

MARTIN: But it is my understanding the statute creating it specifically says that the agency's deputy director serves as acting director until a new director has been nominated. Does that conform with your memory of it?

FRANK: Yes. The statute gives the director a five-year term, and the president can't fire him. Well, it would undermine that whole concept if anything happened to the director during that five-year term, the president got to say who replaced him. We wanted that five-year period, so we said, yes, the director gets a five-year term. And the director who designates the deputy director, in effect, can continue his or her regime after a vacancy for the rest of the five years.

MARTIN: Well, what do you think is at stake here, though? Because if everybody agrees that President Trump will get to name the successor anyway - I mean, the interim named by Mr. Cordray, who's leaving the agency, would only serve until a successor is confirmed. The Republicans are in the majority, so it assumes that whoever the president picks will be confirmed by them. So what do you think is the importance of this fight?

FRANK: First, it is to preserve the independent principle because it may come up at some other time. If they get away with this, then maybe the next time there's a director the president might try to fire him and say I had the right to do that.

Secondly, knowing that there is a few months, it is possible that the director could finish up some pending business. It is possible that there could be some rules set forward that would be protecting people that would be cut off right away.

MARTIN: What happens now in your view? And I am asking you for an opinion here. Does this go to the courts?

FRANK: I hope it does. The question is, how does it get there? In America, you have to have this standing to sue. Not everybody can bring a lawsuit. I can't go to court and say, oh, judges, they're hurting my law. Clearly, the person that we think should be the acting director could sue. She's got a right to that. That would be the ideal way. This is a dispute about what the law means. And I would hope the administration would be willing to cooperate in getting it into court.

MARTIN: Before we let you go, I know this is a question that people ask all the time these days, but I feel I have to ask. Have you ever seen anything like this? Did you ever envision anything like this when you set up the agency - this kind of a standoff?

FRANK: First of all, I haven't seen anything like it. But we clearly envisioned it. Look, again, this is not an accident. The Consumer Financial Protection Bureau is given a great deal of independence from any administration power, including, by the way, one that I might like. This is an agency whose job it is to go out and fight with the largest most powerful financial interests in America on behalf of citizens. And so, yeah, we very much envisioned an administration hostile to the notion of consumer protection trying to kill the agency.

MARTIN: That was former Massachusetts Congressman Barney Frank. He's the co-author of the Dodd-Frank Act which created the Consumer Financial Protection Bureau. He was kind enough to join us from New York. Congressman Frank, thanks so much for speaking with us.

FRANK: Sure. Transcript provided by NPR, Copyright NPR.