WASHINGTON -- As a Republican congressman, Mick Mulvaney called the Consumer Financial Protection Bureau a "joke" and said he wished it didn't exist. On Monday, Mulvaney walked into the agency's District of Columbia offices with doughnuts and a new title: boss.
Mulvaney's arrival represented a new escalation of tensions over who ultimately will lead the agency.
Leadership of the agency was thrown into doubt Friday when Richard Cordray stepped down as director and said his chief of staff, Leandra English, would temporarily replace him. A few hours later, President Donald Trump named Mulvaney, the Office of Management and Budget director, to the job.
Both sides are pointing to the fine print in dueling federal statutes to claim authority over the job running one of the most contentious, and powerful, banking industry regulators. English filed suit late Sunday, asking for a temporary restraining order to prevent Trump from appointing Mulvaney as acting director.
Judge Timothy Kelly, a Trump appointee approved recently by the Senate, heard arguments on the case late Monday afternoon but didn't immediately rule.
The government planned to file its response in the case Monday night, and the judge said he would read the filing and "go from there."
Mulvaney, speaking to reporters at the bureau Monday afternoon, announced that he was imposing a 30-day freeze on hiring and new rule-making but said the bureau would continue to function.
"This agency will stay open. Rumors that I'm going to set the place on fire or blow it up or lock the doors are completely false," he said. "I am a member of the executive branch of government. We intend to execute the laws of the United States."
The day started with Mulvaney and English sending out dueling email messages to the agency's 1,600 employees. English said in her message: "I hope that everyone had a great Thanksgiving. With Thanksgiving in mind, I wanted to take a moment to share my gratitude to all of you for your service." English ended the note with her claimed title: "Acting Director."
Shortly after, Mulvaney, already in the director's office, according to photos taken by his staff, responded with his own email.
"It has come to my attention that Ms. English has reached out to many of you this morning via email in an attempt to exercise certain duties of the Acting Director. This is unfortunate but, in the atmosphere of the day, probably not unexpected," he said.
"Please disregard any instructions you receive from Ms. English in her presumed capacity as acting director." Mulvaney also asked employees to report to the general counsel's office any additional professional communications from English.
"I apologize for this being the very first thing you hear from me. However, under the circumstances I suppose it is necessary," he said. "If you're at 1700 G Street today, please stop by the fourth floor to say hello and grab a doughnut."
Like English, Mulvaney signed his missive with the title "Acting Director."
Mulvaney's spokesman later posted on Twitter a photo of empty boxes with half of a single chocolate-covered doughnut remaining.
Mulvaney said the day went smoothly, though he noted the power struggle may be awkward for people who know English. Responding to news reports about the conflicting leadership, he said: "There was one person today who showed up at work claiming to be director. She wasn't here."
English did go to the office, where she sent the early-morning email, but she later went to Capitol Hill to meet with several lawmakers about her plans. Among them were Senate Democratic leader Charles Schumer of New York and Sen. Elizabeth Warren, D-Mass., according to a spokesman for Warren.
White House spokesman Sarah Huckabee Sanders said at a press briefing that Mulvaney has "taken charge" of the bureau and has the "full cooperation" of the staff.
Law vs. law
At the center of the dispute are two laws: the Dodd-Frank Act, the law passed after the financial crisis that created the bureau, and the Federal Vacancies Reform Act, which gives the president authority to appoint temporary department heads while permanent nominees are approved by the Senate.
While the Federal Vacancies Reform Act does allow a president to appoint acting directors at agencies like the Consumer Financial Protection Bureau, the Dodd-Frank Act has specific language that seems to indicate that only a deputy director can step into the acting director position. English was elevated to the deputy director position shortly before Cordray resigned.
Barney Frank, a former Democratic representative from Massachusetts who was a co-sponsor of the Dodd-Frank Act, said the law intended for the acting director to step into any vacancy to protect the agency from political influence.
"Bank regulation is a very sensitive business," Frank said in an interview Monday. "You don't want to expose the agency doing it to the normal political interference, which is what we were afraid of."
But English's push to be recognized as the legitimate acting director took a blow Monday when a memo was released from Mary McLeod, the agency's general counsel, saying she agreed with the White House that Mulvaney should be recognized as acting director.
"I advise all bureau personnel to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB," McLeod wrote.
The Office of Legal Counsel, which acts as a legal adviser to the president, also argued that Mulvaney, not English, was the legitimate director of the department.
One straightforward solution to the issue of who runs the agency is for Trump to nominate his own permanent director. But it may take several weeks for someone to be nominated, and the Senate would have to confirm the appointment.
In the meantime, the legal limbo could threaten the validity of any decisions made by Mulvaney or English in the coming days, legal experts have said.
"People are being investigated by the CFPB all the time," said Alan Kaplinsky, head of the Consumer Financial Services Group for the law firm Ballard Spahr. But any firm thinking about settling with the agency now faces a significant question, he said. "Are you settling it with Mulvaney? Are you settling it with English?"
"It's going to create absolute chaos. You are not going to be able to settle anything," he said.
The GOP has long accused the agency of overreach. Cordray was appointed to the position by President Barack Obama and was criticized by congressional Republicans for being overzealous. But he was lauded by consumer advocates for aggressively going after banks for wrongdoing.
In a 2014 video interview, Mulvaney complained that it could be difficult even to have the agency return a phone call. "The place is a wonderful example of how a bureaucracy will function if it has no accountability to anybody," he said.
The agency is a "joke ... in a sick, sad way," he said.
Trump offered his thoughts on the agency's performance in tweets posted Saturday.
"The Consumer Financial Protection Bureau, or CFPB, has been a total disaster as run by the previous Administrations pick," he tweeted. "Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!"
Information for this article was contributed by Renae Merle of The Washington Post; by Ken Sweet, Catherine Lucey and Julie Carr Smyth of The Associated Press; and by Katie Rogers of The New York Times.
A Section on 11/28/2017