Lawyers predict CFPB pick will be decided in court: report
© Greg Nash

As the White House and Consumer Financial Protection Bureau (CFPB) spar over who will head the watchdog agency in the absence of a permanent director, lawyers say that the issue will likely have to be settled in the courts.

According to a Reuters report, regulatory attorneys say the issue of who will take over the agency after the resignation of Richard Cordray, its first director, is almost certain to be challenged in court.

The issue of succession at the CFPB was thrust into the spotlight on Friday after Cordray elevated chief of staff Leandra English to deputy director, setting her up to serve as the agency's acting director after his departure.

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Friday was Cordray's last day at the agency.

Hours after English was promoted, however, President Trump tapped White House budget chief Mick MulvaneyMick MulvaneyHeadhunters having hard time finding jobs for former Trump officials: report Trump holdovers are denying Social Security benefits to the hardest working Americans Mulvaney calls Trump's comments on Capitol riot 'manifestly false' MORE as the agency's interim director, leaving it unclear exactly who would lead the CFPB until a new permanent director is nominated and confirmed. 

The 2010 Dodd-Frank Wall Street Reform Act, which established the CFPB, says that the deputy director is to lead the agency in the absence of a permanent director. But the White House has argued that Trump has the authority to override that line of succession under the 1998 Federal Vacancies Reform Act.

In a memo on Saturday, the Justice Department's Office of Legal Counsel said that Trump has the authority to appoint an acting director to the CFPB under the Federal Vacancies Reform Act, lending credence to the White House's argument.

Alan Kaplinsky, head of the law firm Ballard Spahr's consumer financial services group, told Reuters that, while Dodd-Frank allows the deputy director to take over in the short term, it does not specifically say that the deputy director will take over in the event that a director resigns.

“I think Trump wins, but unfortunately it is going to take a while,” he said. 

Quyen Truong, who served as the CFPB's assistant director and deputy general counsel until last year and is now a partner at the law firm Stroock & Stroock & Lavan, told Reuters that the “agency’s actions during this period almost certainly will be subject to legal challenge.”