WASHINGTON (Reuters) – A battle over who should run the U.S. Consumer Financial Protection Bureau (CFPB) in the coming months was set for court as Obama-era holdovers sought to maintain their control over a powerful watchdog which President Donald Trump is seeking to curb.
CFPB staff returning to work on Monday after the U.S. Thanksgiving holiday break were left scratching their heads over who was in charge after outgoing director Richard Cordray formally resigned on Friday and elevated his former chief of staff, Leandra English, to replace him temporarily.
Hours later, President Donald Trump sought to over-rule that move by naming his budget chief Mick Mulvaney — a harsh critic of the agency — as acting director. Trump wants Mulvaney to run the CFPB until he can get a permanent successor confirmed by the Senate, a process which could take months.
In yet another twist late on Sunday, English sued the Trump administration seeking to block Mulvaney’s appointment. The move means a federal court will now decide which law applies when filling a temporary leadership vacancy at the relatively new agency.
The unprecedented battle reflects competing visions of how to regulate the U.S. financial system.
Created in the wake of the financial crisis to protect consumers from predatory lending, the CFPB is hated by Republicans who think it wields too much power and burdens banks and other lenders with unnecessary red tape.
President Barack Obama appointed Cordray, a Democrat, as the CFPB’s first director and he developed a reputation for drafting aggressive rules curbing products such as payday loans while issuing multimillion dollar fines against large financial institutions like Wells Fargo (WFC.N).
Factbox: What is the U.S. Consumer Financial Protection Bureau?
The CFPB was preparing to sue Santander (SAN.MC) as early as this week alleging that the Spanish bank overcharged borrowers on auto loans, two sources familiar with the plans told Reuters last week.
It was not clear if that lawsuit will now go ahead.
The agency’s rule-making ability has already been halted by the Republican-controlled Congress, which last month killed a CFPB rule that had allowed borrowers to join together to sue lenders.
Even if English prevails, Trump’s permanent nominee is expected to neutralize much of the CFPB’s work. Some of the names mentioned by lobbyists as potential permanent successors to Cordray include Republican Representatives Jeb Hensarling and French Hill, both CFPB critics.
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