- The Washington Times - Thursday, February 1, 2018

Newly released emails reveal how former Consumer Financial Protection Bureau chief Richard Cordray scrambled to justify appointing his own successor at the agency to thwart President Trump.

A week after announcing his plans to step down last November, Mr. Cordray circulated articles from two liberal outlets asserting that the president couldn’t name a new acting director of the bureau.

“Succession Issues — Here is Adam Levitin’s post and it bears serious scrutiny today for discussion,” stated the subject line of an email from “RC” — believed to be Mr. Cordray — on Nov. 22. “Mary, need you to have people consider it further please.”

“Mary” is CFPB general counsel Mary McLeod. Despite Mr. Cordray’s pressure, she agreed with Mr. Trump’s decision to name Office of Management and Budget Director Mick Mulvaney as acting head of CFPB.

The articles cited in the email had been posted on the Intercept and on Credit Slips, a banking blog that has featured articles by Sen. Elizabeth Warren, the Massachusetts Democrat who helped to create the CFPB.

Cause of Action Institute, a nonprofit watchdog group, obtained the emails through a Freedom of Information Act request.

Mr. Cordray tapped his chief of staff, Leandra English, to become deputy director, putting her in line — in Mr. Cordray’s view — to take over as acting director when he quit. Cause of Action called it a “last-ditch coup” attempt.

Ms. English sued to block Mr. Mulvaney from taking over as acting director, but a federal judge has sided with the White House. In a separate case, a federal appeals court ruled this week that the CFPB’s power structure of a single director is constitutional — a decision that is expected to be appealed to the Supreme Court.

Cause of Action counsel Eric Bolinder said the emails suggest a hasty internal plan among Mr. Cordray and his staff to set up Ms. English as his successor.

“This brazen attempt to commandeer an entire agency threatens the Constitutional order,” he said. “Were Cordray and English successful, they would have essentially created an agency that fell outside of any of the three branches of government. Deciding who wields such awesome power should not happen in a series of harried emails between bureaucrats. It should be decided by the president and, when a permanent successor is ultimately named, the Senate confirmation process.”

Cause of Action said on the day of Mr. Cordray’s resignation, Nov. 24, 2017, “documents revealed a scramble inside CPFB to properly time the gambit.”

“In an email thread titled ‘Possible presser’ sent between Zixta Martinez, associate director for external affairs, Jennifer Howard, assistant director for communications, Kate Fulton, deputy chief of staff, Cordray, and English, the group appears to discuss a document that is distinct from Cordray’s formal resignation announcement,” Mr. Bolinder said. “The group is concerned about the resignation going out before this ‘presser’ document which, presumably, was the announcement of Leandra English as deputy director.”

The emails provide an internal glimpse into maneuverings that go to the heart of the legal and political debate over the agency created in 2010 by the Dodd-Frank financial regulatory law to serve as a watchdog on Wall Street. Republicans have long argued that the CFPB has too much power and no accountability, and a federal appeals court panel initially agreed with that view, saying the agency’s single-director structure was unconstitutional.

But the full U.S. Circuit Court of Appeals for the District of Columbia ruled 7-3 this week that the CFPB can continue to operate with a powerful single director who cannot be removed by the president at will, and whose budget is independent of Congress.

The appeals court also suggested, however, that the agency’s director can be fired by the president over something as minor as a policy disagreements. Some observers expect the case to end up at the Supreme Court.

Overlooked in the court’s ruling was that it also handed a victory to the mortgage company, PHH Corp. of Mount Laurel, New Jersey, that filed suit against the CFPB over its $109 million fine for violating federal real-estate transaction rules. PHH, which had also sued to dismantle the consumer bureau, said it was “important and gratifying” for the company and the industry that the appeals court agreed to the dismissal of the fines.

Richard Hunt, president and CEO of the Consumer Bankers Association, hailed the decision to repeal the penalty on PHH, saying the fine had “undermined the longstanding application of” the Real Estate Settlement Procedures Act.

A coalition of conservative grassroots leaders and groups urged Mr. Mulvaney on Thursday to conduct a full and public audit of the CFPB’s finances, citing the agency’s alleged misuse of money collected from fines.

“It has been well documented that the CFPB has used the money it collects from civil penalties leveled against financial institutions to bankroll left-wing activist groups,” they said in a letter. “We would like to get an accounting of all the groups that have received these funds. In addition to the lavish spending on its agency headquarters, it was reported last year by former CFPB enforcement attorney, Ronald Rubin, that the CFPB awarded $43 million to an advertising firm that did work for the presidential campaigns of Barack Obama and Hillary Clinton.”

The Intercept reported Thursday that Mr. Mulvaney has taken away enforcement powers from the bureau’s Office of Fair Lending and Equal Opportunity, which had penalized lenders that its invesigators said imposed higher interest rates on minorities than for whites.

The office will move under the direct control of Mr. Mulvaney to focus on “advocacy, coordination and education,” according to the report.

• Dave Boyer can be reached at dboyer@washingtontimes.com.

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