As Mulvaney Demands CFPB Changes, Who’s Next to Lead?

Financial Services Law

With CFPB Acting Director Mick Mulvaney asking Congress to reduce the power of the very Bureau he presently leads, the question becomes this: Who will take the permanent reins at the CFPB, and when will that change occur?

What happened

Last November, President Donald Trump named Mick Mulvaney, already the director of the Office of Management and Budget (OMB), to take over “acting” leadership duties at the Consumer Financial Protection Bureau (CFPB or Bureau) upon outgoing director Richard Cordray’s resignation. The transfer did not proceed smoothly, with Cordray attempting to circumvent the installation by appointing Leandra English as deputy director prior to his resignation, and ongoing litigation continues to raise doubts as to who may legally run the Bureau until a permanent director is confirmed.

In the interim, Mulvaney has moved aggressively in managing the CFPB. His first day on the job, he ordered a 30-day freeze on all new rulemakings, hiring (which has since been partially lifted) and payments generated from enforcement actions.

Mulvaney also initiated a complete review of the Bureau’s enforcement, supervision, rulemaking, market monitoring and education activities, releasing requests for information (RFIs) for public comment on a variety of topics. In a recent report to Congress, Mulvaney has declared the Bureau “far too powerful,” and urged legislative reform to curtail those powers. His wish list includes (1) Congressional oversight over the CFPB budget, (2) subjecting all Bureau rules to legislative approval and (3) placing the director under the direct authority of the president.

Pursuant to the Federal Vacancies Reform Act (FVRA), however, Mulvaney’s stay is limited. Not only does he retain his full-time job at OMB, but also, as acting director, he may hold the position for only 210 days, and the time to find a permanent replacement to lead the Bureau is running out (his last day would be on or about Friday, June 22, 2018). Who are the possibilities to continue the change Mulvaney has started? The White House has yet to make any formal nomination or announcement, but many names have been mentioned as possibilities.

Topping the list: J. Mark McWatters, chair of the National Credit Union Administration, and Jonathan Dever, a state representative in Ohio. Rumor had it that the job was McWatters’ to lose, until critics began to emerge. Dever, who also runs his own law firm focusing on foreclosure defense, has the backing of Rep. Steve Stivers (R-Ohio), a member of the House Financial Services Committee, but is a relative unknown.

Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee and a longtime critic of the CFPB, also appears on the short list of possible nominees, even though most industry wonks think he will decline the position if offered. Two of Rep. Hensarling’s close aides have already been installed at the Bureau, with one filling the spot vacated by English as the Bureau’s chief of staff and a second joining as senior adviser to Mulvaney.

Rep. Hensarling—who has indicated he does not plan on seeking re-election, leaving his schedule open for a possible nomination—shared his thoughts on the future of the CFPB with NPR on Nov. 30, 2017. “Frankly, I do like the idea that we centralize consumer protection for financial products into one agency,” he said. “What I dislike, though, is having an agency that essentially has the power of unelected, unaccountable bureaucrats writing law as opposed to enforcing law.”

Keith Noreika, former acting comptroller of the Office of the Comptroller of the Currency (OCC), and Todd Zywicki, George Mason University law professor, are also frequently mentioned in discussions of possible nominees. Zywicki has laid out a scholarly analysis of the CFPB with research publications such as “The Consumer Financial Protection Bureau and the Return of Paternalistic Command-and-Control Regulation” and “The Consumer Financial Protection Bureau: Savior or Menace?” But Zywicki’s name has faded from the short list of late, and few are predicting him for the director slot.

As for Noreika, he is free to accept the position since his term at the OCC ended in late November; his primary critique of the Bureau was focused on the controversial Arbitration Rule.

Other names still being tossed around include Mark Calabria, chief economist for Vice President Mike Pence, given his background in financial policy (he was an aide to Sen. Richard Shelby [R-Ala.] while he chaired the Senate Banking Committee and headed up financial services policy for the Cato Institute), while former Texas Rep. Randy Neugebauer (R-Texas)—a frequent and harsh CFPB critic—interviewed for the position prior to Mulvaney’s interim appointment, and likely remains interested.

Why it matters

These are uncertain times for the CFPB. The 210-day period under the FVRA will come to an end for Acting Director Mulvaney very soon. That leaves the White House limited time to make a nomination and get a new director approved by a Congress divided along party lines. A failure to effect the change could place Leandra English at the reins. Stay tuned.



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