Attorney General Derek Schmidt to Federal Court: CFPB Not Authorized to Choose Its Own Director

December 20, 2017 – Despite the unique and unaccountable governance structure of the Consumer Financial Protection Bureau (CFPB), only the president has the legal authority to select the CFPB’s acting director, Kansas Attorney General Derek Schmidt has told a federal district court.

In a brief filed this week in the U.S. District Court for the District of Columbia, Schmidt and the attorneys general of 12 other states argue that under the Federal Vacancies Reform Act, only the president has the authority to appoint the CFPB’s acting director and that statute supplants any competing framework set out in the Dodd-Frank Act.

The attorneys general argue that the CFPB director—and by extension, the acting director—wields vast powers commensurate with a principal officer of the United States and that under U.S. Supreme Court precedent those powers can be wielded only by an official nominated and appointed by the president. The 13 attorneys general contend that the attempt by Leandra English, a holdover staff member of the CFPB, to secure and hold the position of acting director without permission of the president is illegal.

“The CFPB wields sweeping power over the actions of millions of Americans,” the attorneys general wrote in their filing. “As a panel of the D.C. Circuit recently observed, ‘the Director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. Government.’ Any federal official who wields that level of power should be selected by the President – not by an unaccountable federal bureaucrat.”

The brief argues that the states have a direct interest in ensuring that the CFPB governance structure is accountable to democratically elected institutions. In a separate case that remains pending, Kansas and other states are arguing that the structure of CFPB, which insulates it from the congressional budget process that applies to other agencies, is illegal.

By WIBW News Now
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