Donald Trump’s pick to lead bank regulator creates crisis over who’s in charge

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President Donald Trump’s choice to name Mick Mulvaney, the White House budget director, as the acting head of the Consumer Financial Protection Bureau has created confusion over who is supposed to lead the bank regulator that has constantly been under attack by Republicans. 

Mr Trump appointed Mr Mulvaney just hours after the CFPB’s director, Richard Cordray, stepped down and promoted his chief of staff Leandra English as the interim replacement. 

The move by Mr Cordray, who was appointed by former Democratic President Barack Obama, was widely seen as an attempt to prevent the White House from naming a successor. 

The 2010 Dodd-Frank Act, which established the CFPB, explicitly says the independent agency’s deputy director shall “serve as acting Director in the absence or unavailability of the Director.”

But the Justice Department, in a memo over the weekend, said Mr Trump has the authority to name a new director to the independent agency created in the wake of the 2007 financial crisis.

The Federal Vacancies Act allows the president to install a temporary acting head of any executive agency who has already been confirmed by the Senate to another position, such as Mr Mulvaney.

It it is unclear whether the the Dodd-Frank Act supercedes the Vacancies Act, or the other way around, which is something the courts may end up having to sort out.

If Mr Mulvaney ends up in charge, he is likely to implement sweeping change at the agency he has called “the very worst kind of government entity.” The 50-year-old former congressman has wanted the bureau’s authority significantly curtailed. 

The CFPB is “a wonderful example of how a bureaucracy will function if it has no accountability to anybody,” Mr Mulvaney said in 2014, adding that it is a “sick, sad” joke.

The President wrote on Twitter that the CFPB “has been a total disaster as run by the previous Administration’s pick.” 

“Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!” Mr Trump exclaimed. 

Financial services companies had characterised the outgoing director as overly aggressive. 

Multiple Republicans have sided with the President in the debate over who should be Mr Cordray’s successor. 

“I expect that Mick Mulvaney will be on the job and he’ll be calling the shots over there,” said John Thune, the third-ranking Republican in the Senate, in an interview on Fox News Sunday.

“I think very much it sounds like the Justice Department has come out and supported the president’s position on this,” he added. “Ultimately, this may end up in court.”

Senator Lindsey Graham told CNN: “I think the president’s on good ground here to appoint somebody under the vacancy statute.” 

Meanwhile, Democratic Senator Richard Durbin said he supported the decision of Mr Cordray. 

In an interview with CNN, he suggested Mr Trump is catering to the desire of Wall Street to blow up the “watchdog agency” that regulates consumer lenders.

“Wall Street hates it like the devil hates holy water. And they’re trying to put an end to it with Mr Mulvaney stepping into Cordray’s spot,” Mr Durbin, the Senate minority whip, said on State of the Union

The debate is currently centred on who will temporarily be at the helm of the CFPB. But Mr Trump will ultimately be in charge of nominating Mr Cordray’s permanent replacement, which could still be Mr Mulvaney. That pick would need to be confirmed by the Senate.