Richard Cordray is no longer the director of the Consumer Financial Protection Bureau. He resigned as of midnight on November 24.

But—as with so many events relating to the CFPB since its creation in 2010—there is a controversy about what happens next.

Before he resigned, Mr. Cordray appointed Leandra English—who had been serving as the agency’s chief of staff—to the position of deputy director.  And in a note to the Bureau’s employees, Mr. Cordray stated: “upon my departure, she will become the acting Director.”

Hours later, the White House announced that the President “is designating Director of the Office of Management and Budget (OMB) Mick Mulvaney as Acting Director of the Consumer Financial Protection Bureau (CFPB).” It stated that “Director Mulvaney will serve as Acting Director until a permanent director is nominated and confirmed.”

Is the New York Times correct in asserting that the Bureau now has “dueling directors, and there [is] little sense of who actually would be in charge Monday morning”?

No. The law is clear, and Mr. Mulvaney is the sole acting director of the CFPB.

The Dodd-Frank Act did specifically create the office of deputy director.  And the statute states (in Section 1011(b)(5)) that the deputy director “shall— (A) be appointed by the Director; and (B) serve as acting Director in the absence or unavailability of the Director.”

But another federal law also addresses authority to fill vacant positions on a temporary basis—the Federal Vacancies Reform Act, enacted by Congress in 1998. As the Supreme Court explained in a recent decision, this statute sets limits on the appointment of individuals on an acting basis—because Congress perceived a threat to the Senate’s advice-and-consent power from the large number of individuals serving in a temporary capacity in offices for which permanent appointments would be subject to Senate confirmation.

The Vacancies Act creates three basic options for filling these offices on an acting basis: (1) the “first assistant” to the vacant office—typically the individual occupying the deputy position; (2) another Senate-confirmed individual; or (3) an employee or officer of the agency, provided certain criteria are satisfied.

The second option is the one relevant here.  The Act provides (in 5 U.S.C. § 3345(a)(2)) that when a vacancy occurs in an office requiring appointment by the President and confirmation by the Senate, “the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity.”

In other words, the President may designate an individual who has been confirmed by the Senate for one position to fill a now-vacant separate office on an acting basis.  That is the authority invoked by the President to designate Mr. Mulvaney as acting director of the Bureau.

There is no serious argument that the Dodd-Frank Act precludes the President from exercising his authority under the Vacancies Act.

First, former director Cordray did act within his authority in appointing Ms. English to the deputy director position.  And at the time he sent his note to the Bureau staff, Ms. English was in line to serve as acting director—because the President had not yet exercised his authority under the Vacancies Act. Mr. Cordray therefore was correct in his statement that “upon my departure, [Ms.English] will become the acting Director pursuant to section 1011(b)(5) of the Dodd-Frank Act”—because that is what would have happened by operation of the Dodd-Frank Act in the absence of action by the President under the Vacancies Act.  Of course, Mr. Cordray’s statement has no legal authority and, in any event, it did not even purport to address the effect of the President’s invocation of his Vacancies Act authority.

Second, some have argued that the Vacancies Act precludes the President from appointing another official to serve in an acting capacity when the statute creating the position specifies a successor, as the Dodd-Frank Act does here.

They rely on a section of the Vacancies Act (5 U.S.C. § 3347(a)) stating that the Act provides the “exclusive means” for authorizing individuals to serve on an acting basis “unless” another “statutory provision expressly . . . designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” Because the Dodd-Frank Act designates the CFPB’s deputy director to perform the director’s functions on an acting basis, they contend, the Vacancies Act does not apply.

But this provision of the Vacancies Act simply preserves the validity of other statutes that empower officials to serve on an acting basis (such as the Dodd-Frank Act here)—by stating that the Vacancies Act provisions are not “exclusive” in such circumstances. The provision does not in any way limit the applicability of the Vacancies Act.  To do that, the Vacancies Act would have to state that it did not apply to such offices—and that the other statute specifying the line of succession is the sole method for designating an individual to serve in an acting capacity.  There is no such language of exclusion in the Vacancies Act’s text.

Third, others point to the language of the Dodd-Frank Act, stating that the deputy director “shall . . . serve as acting Director in the absence or unavailability of the Director.” They argue that the use of “shall” demonstrates Congress’s intent that only the deputy director may assume the acting director role.

But that would mean that the later-enacted Dodd-Frank Act creates an exclusion from the generally-applicable rules established by the Vacancies Act—and the Supreme Court has consistently held that such “repeals by implication” are disfavored. The Court strives to harmonize statutes, and would do so here by holding that the Dodd-Frank Act provision does not override the Vacancies Act, and instead establishes a line of succession in the absence of the President’s invocation of the Vacancies Act.

That conclusion is supported by the text of the Vacancies Act itself.  In the provision just prior to the one authorizing appointments on an acting basis of other Senate-confirmed individuals, the Vacancies Act (in 5 U.S.C. § 3345(a)(1)) states that “the first assistant to the [vacant] office  . . . shall perform the functions and duties of the office temporarily in an acting capacity.”  Congress’s use of “shall” in the Dodd-Frank Act thus parallels the use of “shall” in the Vacancies Act itself and could not be interpreted to override the generally-applicable Vacancies Act provisions.

In fact, the Justice Department’s Office of Legal Counsel has reached the same conclusion with respect to other statutes that specify a line of succession—determining twice that the President may use his Vacancies Act authority to designate another individual to function in an acting capacity.

Fourth, significant constitutional questions would arise if the President could not invoke his Vacancies Act authority.

The CFPB has a unique structure: unlike other federal independent agencies (the SEC, NLRB, FTC, etc.) it is not headed by a multi-member bipartisan commission but rather by a single director who serves a fixed five-year term and can only be removed by the President for cause. That structure was held unconstitutional by two federal appellate judges in the PHH case, and the issue is now before the full US Court of Appeals for the DC Circuit—the case was argued in May and remains under consideration.

Critical to the panel’s holding of unconstitutionality was the insulation of the Bureau’s director from the accountability to the political branches that exists with respect to other independent agencies. Preventing the President from designating an acting director would further insulate the Bureau from political accountability, and compound the constitutional concerns.

*     *     *     *

Hopefully, November 27 will not see dueling acting directors attempting to administer the CFPB.  If it does, the ancient writ of quo warranto may provide an expeditious mechanism for resolving the dispute in court—as one academic observer has suggested.

The CFPB needs, and deserves, a calm transition. Efforts to block the President’s choice will only undermine the Bureau’s legitimacy, which is the last thing the Bureau’s supporters should want to do at this time.

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