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Some thoughts on President Trump’s authority to replace Director Cordray

Posted in CFPB General

There has been some debate about President Trump’s authority to designate a replacement for Director Cordray should he resign or be removed by the President.

The Dodd-Frank Act authorizes the CFPB Director to appoint a Deputy Director who shall “serve as acting Director in the absence or unavailability of the Director.”  Since the resignation of Steven Antonakes as Deputy Director in July 2015, the position of Deputy Director has remained unfilled.  Currently, David Silberman is serving as Acting Deputy Director.  Should Director Cordray resign or be removed by the President, it is unclear whether an Acting Deputy Director would be eligible to serve as Acting Director under the Dodd-Frank provision.

Assuming Mr. Silberman could not serve as Acting Director (or was also removed by President Trump), the President might be able to rely on the Federal Vacancies Reform Act of 1998 to temporarily fill the vacancy with one of his Senate-confirmed Cabinet members or another confirmed agency head until his nominee for Director is confirmed.  The Act provides that “if an officer of an Executive agency…whose appointment to office is required by the President, by and with the advice and consent of the Senate, dies, resigns or is otherwise unable to perform the functions and duties of the office…the President (and only the President) may direct a person who serves in an office for which the 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 [subject to the Act’s time limitations.]”

It is unclear, however, whether Director Cordray would be considered the officer of an “executive agency” for purposes of the Act (which does not define the term).  The CFPB is designated an “executive agency” by the Dodd-Frank Act for purposes of its placement within the Executive Branch.  However, for purposes of the independence of its leadership, it is structured as an “independent agency” rather than an “executive agency.”  In its PHH decision, which has not yet taken effect, the D.C. Circuit changed the CFPB’s structure from an independent to an executive agency.  The Trump Administration could take the position that it does not have to wait for the PHH appeal to be resolved before it considers the CFPB to no longer be an independent agency.

Dodd-Frank Act Section 1066, entitled “Interim Authority of the Secretary,” authorized the Secretary of the Treasury “to perform the functions of the Bureau” under Subtitle X “until a Director is confirmed.”  Although it appears this provision would no longer apply pending confirmation of the next director, it suggests that Steven Mnuchin, President Trump’s nominee for Treasury Secretary, would be an appropriate person for Mr. Trump to designate under the Act as Acting CFPB Director (assuming Mr. Mnuchin is confirmed).  In addition, since only a simple majority vote would be required to confirm Mr. Trump’s nominee for CFPB Director, the confirmation process should not be lengthy (barring any legal action brought challenging Director Cordray’s removal that would delay the process).