consumer financial protection bureau

On July 6, 2018, Leandra English, through her attorney via Twitter, announced she would be resigning from the Consumer Financial Protection Bureau (“CFPB”). In so doing, Ms. English is also dropping her lawsuit against the CFPB in which she challenged Mick Mulvaney’s status as the acting director and claimed that she was the true acting director. Ms. English attributed her resignation decision to President Trump’s nomination of Kathy Kraninger, a White House aide, to be the CFPB’s director.

Ms. English was previously promoted by then-Director Richard Cordray before his departure the day after last November’s Thanksgiving holiday. Later, during that holiday weekend, Ms. English filed suit to block President Trump’s appointment of Mr. Mulvaney as the CFPB’s acting director. In her suit, Ms. English argued that she was the rightful successor to Director Cordray and challenged the President’s authority to appoint Mr. Mulvaney under the Federal Vacancies Reform Act of 1998 (“FVRA”). Ms. English pursued the lawsuit even though the U.S. Department of Justice’s Office of Legal Counsel had issued a memorandum that concluded the president had the authority to appoint a temporary replacement since the statute provided him with the “exclusive means” to do so unless there was a supervening statute that specified otherwise.

The U.S. District Court for the District of Columbia denied relief to Ms. English over Mr. Mulvaney’s appointment. She appealed that decision to the D.C. Circuit, which appears poised to reject her claim due, in part, to her lack of standing. If the Senate confirms Ms. Kraninger’s nomination, the confirmation will moot Ms. English’s lawsuit. Although Ms. English’s decision may end that lawsuit, the CFPB faces other challenges, and several courts have found the agency’s statutory structure unconstitutional. For additional information, see our prior alerts on this issue here.

On June 21, 2018, in deciding a motion to dismiss a complaint brought the Consumer Financial Protection Bureau (“CFPB”)and the State of New York, Judge Loretta Preska of the U.S. District Court for the Southern District of New York held that the CFPB’s structure is unconstitutional.

Previously the D.C. Circuit, sitting en banc in PHH Corp. v. CFPB, 881 F.3d 75 (D.C. Cir. 2018), had held that Title X of the Dodd-Frank Act, which “established the CFPB as an ‘independent bureau’ within the Federal Reserve System,” was validly enacted. Judge Preska disagreed with the panel and adopted the minority view proposed by the dissent in that case. First, she accepted Judge Brett Kavanaugh’s conclusion that the CFPB was unconstitutionally structured because it is an “independent agency that exercises substantial executive power and is headed by a single Director.” Namely, Judge Kavanaugh took issue with the CFPB’s unchecked authority vested in a single director, where history, liberty, and presidential authority dictate otherwise. Continue Reading An SDNY Dilemma: CFPB Held Unconstitutional Over Director Removal Provision