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October 19th, 2018

Insight

Constitution is on Trump's side in CFPB fight

Noah Feldman

By Noah Feldman Bloomberg View

Published Nov. 28, 2017

The newly filed suit by Democratic appointee Leandra English for the right to serve as acting director of the Consumer Financial Protection Bureau is not helping the cause.

It's based on a highly technical statutory provision, not the Constitution, which instead would tend to support Trump's authority to choose an acting director while he waits for the Senate to confirm a new head he's appointed. The suit is a partisan maneuver that will detract from the seriousness of the effort to keep executive power in check where it matters.

The background to the suit should already make you suspicious of it. English's claim to be acting director of the bank-watchdog agency is based on a clever sleight of hand by the CFPB's outgoing director, Obama appointee Richard Cordray.

As he left office, Cordray appointed English to be deputy director of the bureau. A provision of the law creating the CFPB says that, if there is no director available, the deputy director "shall" serve as the acting director until a new one is confirmed. Technically, Cordray was making English into the deputy director, which was within his power. And technically, that would put English into a role that would let her serve as acting director. But English had never held the position of deputy director before Cordray's last day in office.

Cordray was exploiting a loophole. He was intentionally trying to create a legal crisis by appointing English, aiming to extend his legacy or to make Trump fire English to get his own person into office.

Trump, for his part, had long chafed at the idea that he could only fire the bureau's politically appointed director for good cause. As soon as Cordray was out the door, he named Mick Mulvaney, the director of the Office of Management and Budget, to be acting director of the CFPB. Mulvaney shares Trump's strongly anti-CFPB views.

There were now two competing acting directors. That led to a hastily written opinion by the Office of Legal Counsel in the Department of Justice, the office that is supposed to give the president advice about how to follow the law.

That opinion relied on a different statutory provision, the Vacancies Reform Act of 1998, to conclude that while English could serve as acting director, Trump had the legal authority to name a different acting director instead, so long as that person was already in a post that required Senate confirmation, as Mulvaney is.

Trust me, you don't need to know the arcane statutory interpretation arguments set forth by Office of Legal Counsel or the equally arcane arguments English will use in her suit.

What you do need to know is that, as a general matter, the Constitution expects the president to be able to appoint the heads of agencies in the executive branch. Some agencies designated as "independent," like the CFPB or the Federal Reserve, insulate existing leadership from firing to some extent. Yet even these entities allow the president to make appointments to vacancies when they arise.

There's a good reason. The agencies that make up the bureaucratic state need to have some degree of responsibility to the electorate. The way to make sure they do in our constitutional system is by making the agency heads responsible to the president who picks them. Otherwise, the agencies would truly become the headless fourth branch of government that their critics accuse them of being.

The idea that Trump wouldn't be able to name his own acting director of the CFPB therefore contradicts basic principles of democratic legitimacy. It's at best a bug in a complex statutory scheme, not a feature. There is simply no good structural, logical, or constitutional reason why the dead hand of President Barack Obama's administration should continue to guide the CFPB once Cordray is gone.

The courts may decide English's suit on statutory grounds, without directly invoking the Constitution. Trump is acting within constitutional norms.

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Noah Feldman, a Bloomberg View columnist, is a professor of constitutional and international law at Harvard University and the author of six books, most recently "Cool War: The Future of Global Competition."

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