In Desperate Bid to Maintain Grip on CFPB, Trump Nominates Mulvaney Subordinate for CFPB Director

June 16, 2018

Mulvaney and the White House Have Been Playing Political Games to Keep the “Acting Director” in Charge of the CFPB Indefinitely

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WASHINGTON, D.C. – Kathy Kraninger, who currently serves under Consumer Financial Protection Bureau (CFPB) “Acting Director” Mick Mulvaney at OMB, is President Trump’s choice to take Mulvaney’s place as the CFPB’s Director. In response, consumer advocacy organization Allied Progress released the following statement:

“This is nothing more than a desperate attempt by Mick Mulvaney to maintain his grip on the CFPB, so he can continue undermining its important consumer protection mission on behalf of the powerful Wall Street special interests and predatory lenders that have bankrolled his career,” said Karl Frisch, executive director of Allied Progress.

He continued, “The White House promised a nominee by last January and Mulvaney says he will stay on until at least the end of the year. They know waiting for the last possible moment to announce a nominee and then selecting someone whose resume of relevant experience is basically nonexistent, buys them more time with Mulvaney at the helm.”

“The Senate should call the White House’s bluff and immediately move to hold confirmation hearings and vote to reject this wholly unqualified candidate. Hell, Senate Majority Leader Mitch McConnell is keeping the Senate in town over the August recess to confirm other Trump nominees – what’s one more name to consider? They need to send Mulvaney and the President a message that consumers deserve a champion not a stalking horse,” he concluded.

Background on Potential Nominee

• Kathy Kraninger has absolutely no relevant experience that indicates she is qualified to be America’s chief consumer advocate. Kraninger has focused almost exclusively on homeland security issues in her professional career. She only began working as an associate director at OMB last year, after Mulvaney took over. Kraninger “previously worked for the Department of Homeland Security and the Senate Appropriations Committee,” on the Homeland Security Subcommittee. Her nomination to lead the CFPB raised “concerns among Democrats, especially because of the lack of financial policy expertise in her background.” [Elizabeth Dexheimer, Robert Schmidt, and Jennifer Jacobs, “Trump Favors Little-Known Official to Be Next CFPB Chief,” Bloomberg, 06/15/18]

The White House and Mulvaney: Playing Timing Games to Maintain Control Over CFPB

• In November 2017, a senior White House official said that there would a nominee for CFPB Director by January of 2018. In November of 2017, a senior White House official said, “Trump is close to placing a permanent leader at the agency” and, “A nominee could be chosen in the next couple of weeks and begin the vetting process.” The official added “We are moving very quickly,” and gave the expectation that “an announcement could come by early January.” [Lorraine Woellert, “Victorious Trump moves to reshape consumer bureau,” Politico, 11/28/17]

• Just a few months later, Mick Mulvaney said that he is likely to remain “Acting Director” of the CFPB until the end of 2018 Mulvaney said to reporters at a banking conference in April, “I tell folks that the way the Senate is working we’re just sort of assuming that I’ll be there for the rest of this calendar year — that’s just how we’ve planned.” [Emily Stewart, “The government’s top consumer watchdog hasn’t taken a single enforcement action since Trump’s pick took over,” Vox, 04/10/18]

• When Mulvaney made his comment that he would likely remain at the CFPB until the end of 2018, he knew Trump was required to appoint a new director by June 22. The Trump Administration relied on the Federal Vacancies Reform Act to nominate Mick Mulvaney to lead the CFPB. The law allows for Mick Mulvaney to serve no more than 210 days as Acting Director at the CFPB, unless President Trump names another nominee, in which case, Mulvaney can continue serving as the nominee is considered by the Senate. [Alan S. Kaplinsky, “How long can Mick Mulvaney serve as CFPB Acting Director?,” Ballard Spahr LLP, 02/27/18]

• Senate Majority Leader Mitch McConnel has said that the Senate will take up Trump nominees in August. Mitch McConnell canceled much of the Senate’s August recess to confirm Trump Administration nominees. McConnell blamed “‘historic obstruction'” from Senate Democrats for the need to keep the Senate in session, but observers noted that the move likely averted a conflict with President Trump, who wanted the Senate to stay in session. [Ted Barrett and Lauren Cox, “Mitch McConnell cancels August recess for Senate,” CNN, 06/05/18]

• In May 2018, it was reported that the White House was “dragging out” the nomination of a new CFPB Director to keep Mulvaney at the helm as long as possible. “Sources” have told reporters that “The White House is dragging out the nomination of a permanent director for the Consumer Financial Protection Bureau to ensure that acting CFPB Director Mick Mulvaney calls the shots at the agency until the end of the year or longer.” [Kate Berry, “White House looks to extend Mulvaney’s CFPB tenure,” American Banker, 05/08/18]

• President Trump has previously said he isn’t worried about vacancies in the federal government. President Trump saw no problem with vacancies in federal government positions. He said that most nominees awaiting confirmation were “superfluous” and that his position as president is “‘the only one that matters.'” [Steven Aftergood, “Some ‘Acting Officials Will Soon Lose Authority,” Federation of American Scientists, 11/06/17]
• While in Congress, Mulvaney supported the political ploy to leave a seat on the Supreme Court vacant for 10 months. After Supreme Court Justice Antonin Scalia’s death in 2016, Mulvaney issued a press release in favor of leaving the seat empty, arguing “the right to nominate for the vacancy should […] fall to the incoming President.” [Press Release, Rep. Mick Mulvaney, 03/16/16; Linda Greenhouse, “The Broken Supreme Court [Opinion],” The New York Times, 04/13/2017; Paul Kane, “As the Gorsuch nomination proceeds, this man is taking credit: Mitch McConnell,” The Washington Post, 02/18/17]

THE LEGAL DETAILS ON TIMING

• A district court ruled that Mick Mulvaney could serve as CFPB Director, but an appellate court expressed concern about a political appointee overseeing an independent agency such as the CFPB. The matter is ongoing. In January 2018, a US District Court judge ruled that Mick Mulvaney was able to serve as the Acting Director of the CFPB. However, an appellate panel who heard arguments in the case was “sympathetic” to the argument that “having Mr. Mulvaney wear the proverbial two hats…would threaten the CFPB’s status as an independent agency.” [Mallory Shelbourne, “Judge denies CFPB official’s injunction against Mulvaney,” The Hill, 01/10/18 and Elizabeth R. Connell, “C. Circuit panel questions Mulvaney’s dual CFPB/OMB roles in English appeal oral argument,” Consumer Finance Monitor, 04/13/18]

• Mulvaney can serve as CFPB director until June 22, 2018, unless a nominee is named. The Trump Administration relied on the Federal Vacancies Reform Act to nominate Mick Mulvaney to lead the CFPB. The law allows for Mick Mulvaney to serve no more than 210 days as Acting Director at the CFPB, unless President Trump names another nominee, in which case, Mulvaney can continue serving as the nominee is considered by the Senate. [Alan S. Kaplinsky, “How long can Mick Mulvaney serve as CFPB Acting Director?,” Ballard Spahr LLP, 02/27/18]

• If a nominee is named and the Senate fails to act, Mulvaney could potentially stay at CFPB indefinitely. If the Senate were to not act on a nominee whose role is being filled by an acting officer, then it is unclear how long the acting officer may stay in the role while the Senate is considering their replacement’s nomination. A former Acting Attorney General said the law “‘doesn’t cover it.'” Another legal expert said that Senate inaction could allow an acting officer to stay in their role indefinitely. [Kathryn Watson, “Here is how long McCabe can stay on as acting FBI director,” CBS News, 05/25/17]

• Mulvaney must step down if two replacement nominations are rejected by the Senate. If the Senate rejects two nominations for a position filled by an acting director, the acting officer may not continue to serve while the third nomination is pending. [Matthew Kahn, “Acting Accordingly: Acting Officers and the Federal Vacancies Reform Act,” Lawfare, 11/27/17]

• If Mulvaney had to step down because of the Vacancies Act, nobody would be able to perform the duties of the CFPB Director until the Senate confirmed another nominee. The Congressional Research Service found that if an acting agency head were to stay on at an agency beyond the time allowed by the Vacancies Act, and that time were not extended, then the position would be considered vacant. After that, nobody would be allowed to perform the duties of the vacant office. [Valerie C. Brannon, “Out of Office: Vacancies, Acting Officers, and Day 301,” Congressional Research Service, 11/1/17]

• If the Trump Administration fails to nominate a CFPB director by June 22, 2018, then Mulvaney’s actions after that date may be vulnerable to legal challenges. The Federal Vacancies Act gives the Trump Administration until June 22, 2018 to nominate a replacement for Mick Mulvaney at CFPB. In 2017, the Supreme Court ruled that an action taken by the NLRB that tear was void because the “responsible official” had served beyond the time allowed by the Vacancies Act. [Alan S. Kaplinsky, “How long can Mick Mulvaney serve as CFPB Acting Director?,” Ballard Spahr LLP, 02/27/18; Adam Mazmanian, “Clock ticking on officials in acting roles,” FCW, 11/7/17]

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