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Are consumer advocates just delaying the inevitable in fight over CFPB acting director?

Are consumer advocates just delaying the inevitable in fight over CFPB acting director?
Sen. Elizabeth Warren (D-Mass.) speaks during a protest in front of the Consumer Financial Protection Bureau headquarters on Tuesday. (Mark Wilson / Getty Images)

They waved signs. They banged drums. And they chanted their opposition to Mick Mulvaney’s appointment as acting director of the Consumer Financial Protection Bureau.

“For six years this agency has fought for working people and now it is time for us to fight for the agency,” said Sen. Elizabeth Warren (D-Mass.) at a rally this week in front of the bureau’s headquarters. “Are you ready to fight?”

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The crowd of about 50 protesters roared “Yeah!” in unison.

On the surface, the battle by consumer advocates and Democrats against Mulvaney, an outspoken critic of the bureau, appears just to be delaying the inevitable.

No matter how the ongoing legal dispute over the bureau’s interim leadership turns out, everyone agrees that President Trump has the right to nominate a permanent director to head the Obama-era agency that he and other Republicans have sharply criticized. And the Republican-controlled Senate has shown it’s likely to confirm that nominee.

But supporters of the bureau’s aggressive consumer-protection approach said there are important reasons for the fight: to try to limit how long Mulvaney serves as acting director, as well as to draw public attention to the relatively new bureau and what they see as Republican efforts to weaken it.

“This is not a temporary thing. This is the future of the agency,” said Ed Mierzwinski, consumer program director at the nonprofit U.S. Public Interest Research Group. “This is just kind of the first warning shot.”

Bureau supporters are concerned that Mulvaney, who once called the bureau a ​​​​​“joke … in a sad, sick kind of way,” could be acting director for months. Although he said Trump “is interested in naming a permanent replacement as quickly as possible,” Mulvaney acknowledged the Senate doesn’t always move quickly.

The law under which Trump appointed Mulvaney, the Federal Vacancies Reform Act of 1998, allows Mulvaney to serve for as long as 210 days.

What’s more, that restriction is suspended if a nomination is pending in the Senate. And the 210-day clock starts again if the Senate rejects a nomination.

“A lot can go on during that period of time,” said Alan S. Kaplinsky, head of the consumer financial services group at law firm Ballard Spahr. “The agency can continue on the same trajectory it’s been on or it can be completely changed as Mulvaney seems to want to do. That’s why I think this battle is an important one.”

Mulvaney said that he brings a “new attitude” to the bureau and that the way it interprets and enforces consumer protection laws will be “dramatically different” from under the previous director, Richard Cordray, who was picked by President Obama.

“Anybody who thinks that a Trump administration CFPB will be the same as an Obama administration CFPB is simply being naive,” Mulvaney told reporters this week.

Although there could be a legal cloud over any actions that Mulvaney takes as acting director, he still could heavily influence how the bureau operates. He could stop investigations, end ongoing litigation against financial firms and change regulatory guidance, Kaplinsky said.

Democrats and consumer advocates are trying to pressure Trump to nominate a permanent choice who would face Senate hearings and a confirmation vote — a process that could make it difficult to install an avowed opponent of the bureau such as Mulvaney.

“Are the Republicans willing to stand next to someone who says they want to run this agency for the benefit of Wall Street?” Warren told reporters after Tuesday’s rally. “I don’t think they want to do that.”

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Lauren Saunders, associate director of the National Consumer Law Center, said the fight against Mulvaney is designed to prevent Trump “from doing an end-run” around the process for installing a director.

She and other consumer advocates have backed Leandra English, the bureau’s deputy director, to be the agency’s acting chief. English says she is the rightful interim director under a provision of the 2010 Dodd-Frank act that created the bureau.

The Justice Department said that the 1998 vacancies law supersedes that and allows Trump to install Mulvaney. A federal judge on Tuesday sided with the Trump administration and rejected English’s request for a temporary restraining order to prevent Mulvaney from taking office.

English’s attorney indicated the legal fight wasn’t over and that he may seek an injunction.

Bureau supporters also have another reason for wanting to get a permanent director in place. The president can fire the director only for cause. They would like a Trump-appointed director’s five-year term to begin so that if a Democrat wins the White House in 2020 it would expire earlier in the new president’s term.

That could be a reason for Republicans to stall on a permanent director. But there’s a risk in that, said Brian Knight, senior research fellow at the Mercatus Center at George Mason University.

If Republicans lose control of the Senate in 2018, it could prevent them from confirming a permanent director, he said.

“You want to get your own person permanently in there so you have that five-year term,” Knight said of Republicans.

Saunders said she’s less worried about starting the clock on the next permanent director than about getting Mulvaney out of the acting role.

“It’s a concern to prolong the period in which an enemy of consumer protection could be at the helm of the consumer watchdog, especially if it’s somebody who doesn’t have to go through the hearing and confirmation process,” she said.

As they protest Mulvaney, consumer advocates also believe that the high-profile controversy shines a spotlight on the bureau, which will boost public support for it.

“Airing this debate works in favor of the CFPB's many existing supporters because the more people know about an agency that fights Wall Street, the more they like it,” said Carter Dougherty, a spokesman for Americans for Financial Reform, a coalition of groups advocating tougher oversight of the financial system.

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