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A legal battle broke out over control of the Consumer Financial Protection Bureau (CFPB) late last month. Upon resigning, former Director Richard Cordray attempted to install his own successor, while President Trump named Mick Mulvaney acting director to oversee the agency until a permanent director is nominated and confirmed by the Senate. Confusion, chaos, and legal challenges ensued.
The D.C. District Court weighed in and was right to confirm the legitimacy of Director Mulvaney, though the litigation is ongoing. The Federal Vacancies Reform Act clearly states that the president has the power to install an interim director who has been Senate confirmed for another position. Even the CFPB’s own general counsel—who was hired by former Director Cordray—indicated she “advise[d] all bureau personnel to act consistently with the understanding that Director Mulvaney is the Acting Director of the CFPB.”
Although we were pleased with the initial legal outcome, this is not how good government is supposed to work. The drama has been a paralyzing distraction, preventing the bureau from focusing on what really matters: consumer protection and economic growth. And it could have been prevented if the agency, created under Dodd-Frank, had been structured to maximize accountability, transparency, and certainty. But it wasn’t.
The Chamber has long argued that the CFPB’s structure does not allow for appropriate checks and balances. The succession battle makes it clear that this agency should be led by a bipartisan commission—not a single, all-powerful director who isn’t subject to congressional oversight or funding authority—consistent with other banking and consumer protection agencies.
Businesses need transparency and consistency from government to thrive, create jobs, and build innovative new products and services. Until now, the CFPB has failed to provide it. For the past six years, the financial marketplace has been starved for clear rules of the road. Instead of delineating clear standards, the bureau has played in the gray area of regulating through enforcement.
With new leadership set to take the reins of the CFPB, an important opportunity exists to strengthen the agency. It should embrace transparent, narrowly tailored rules based on robust economic analysis. It should promote consumer choice of financial products and services. And it should coordinate with other regulators to streamline processes and minimize burdens.
In the meantime, the U.S. Chamber of Commerce looks forward to working with acting Director Mulvaney to move beyond the chaos and help bring certainty, transparency, and accountability to the CFPB and its work.