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Biden consumer bureau pick could take over agency on Inauguration Day

Biden consumer bureau pick could take over agency on Inauguration Day
© Greg Nash

President-elect Joe BidenJoe BidenIntercept bureau chief: minimum wage was not 'high priority' for Biden in COVID-19 relief South Carolina Senate adds firing squad as alternative execution method Obama alum Seth Harris to serve as Biden labor adviser: report MORE’s pick to lead the Consumer Financial Protection Bureau (CFPB) could temporarily take control of the agency as soon as Inauguration Day thanks to a precedent established by President TrumpDonald TrumpSouth Carolina Senate adds firing squad as alternative execution method Ex-Trump aide Pierson won't run for Dallas-area House seat House Oversight panel reissues subpoena for Trump's accounting firm MORE.

Federal Trade Commissioner Rohit ChopraRohit ChopraBiden's Wall Street watchdog picks to offer clues on regulations On The Money: Senators push for changes as chamber nears vote on .9T relief bill | Warren offers bill to create wealth tax On The Money: Democrats scramble to save minimum wage hike | Personal incomes rise, inflation stays low after stimulus burst MORE, whom Biden will nominate to be CFPB director, should be able to step into his role on an acting basis under a law used by Trump to install a temporary chief for the bureau in 2017.

Under the Federal Vacancies Reform Act, the president can appoint any official serving in a Senate-confirmed position to a vacant Senate-confirmed role on an acting basis.

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Trump used the Vacancies Act to nominate Mick MulvaneyMick MulvaneyOMB nominee gets hearing on Feb. 9 Republicans now 'shocked, shocked' that there's a deficit Financial firms brace for Biden's consumer agency chief MORE, then the director of the Office of Management and Budget, to serve as acting CFPB director in 2017 after the bureau’s former chief Richard CordrayRichard Adams CordrayFinancial firms brace for Biden's consumer agency chief Consumer bureau director resigns after Biden's inauguration Biden consumer bureau pick could take over agency on Inauguration Day MORE resigned. Then-CFPB Deputy Director Leandra English sued Trump, arguing that he illegally blocked her service as the bureau’s temporary leader.

While the Dodd-Frank Act specifies that the CFPB’s deputy director is supposed to lead the agency when it has no Senate-confirmed leader, a federal judge ruled that the Vacancies Act could be used to override that provision. English appealed, but dropped her lawsuit and resigned from the bureau after Trump nominated current CFPB Director Kathy Kraninger in June 2018.

Biden is expected to fire Kraninger, a Republican, if she doesn’t resign before he takes office and can do so thanks to another precedent Trump helped set. The Justice Department and CFPB backed a challenge to the agency’s constitutionality that the Supreme Court resolved in June by striking a provision from Dodd-Frank that limits when the president can fire the CFPB director.

After Kraninger departs, Biden could then appoint Chopra, who was confirmed to the FTC by the Senate in 2018, as the CFPB’s acting director. However, the Vacancies Reform Act bars a current nominee for that position from serving in an acting capacity, so Biden would be forced to nominate a new acting director when he formally nominates Chopra. 

The Hill has reached out to the Biden transition team regarding his plans for the CFPB directorship.

Chopra was previously the assistant director of the CFPB and served as its first student loan ombudsman. He has been fiercely critical of the student loan servicing industry and is considered by financial sector watchdogs as a natural heir to the agency designed by Sen. Elizabeth WarrenElizabeth WarrenOvernight Health Care: Biden says US will have enough vaccine for all adults by end of May | Biden calls on all states to vaccinate teachers by the end of March | Texas, Mississippi lift mask mandates Biden picks for financial agencies offer preview of regulatory agenda Becerra tells Warren he will do 'thorough review' of executive actions on drug prices MORE (D-Mass.).

Updated at 5:49 p.m.