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Despite New CFPB Nominee, Mulvaney Could Be Around a Long Time

Observers see the pick as a strategic move to extend his tenure

The clock is ticking on Mick Mulvaney’s time as acting director of the Consumer Financial Protection Bureau, which is capped at 210 days. But that doesn’t mean he’s going anywhere. (Tom Williams/CQ Roll Call)
The clock is ticking on Mick Mulvaney’s time as acting director of the Consumer Financial Protection Bureau, which is capped at 210 days. But that doesn’t mean he’s going anywhere. (Tom Williams/CQ Roll Call)

Democrats could play into the White House’s hand if they plan to delay President Donald Trump’s pick to lead the Consumer Financial Protection Bureau, experts say.

The White House announced Saturday that the president intends to nominate Kathy Kraninger, who is currently an associate director of the Office of Management and Budget, where Mick Mulvaney is the director.

Mulvaney has doubled since late November as acting head of the CFPB, a position that can be filled on an acting basis for only 210 days, according to the federal vacancies act.

That clock was set to tick out on June 22. Under the vacancies law, once there’s a nominee, Mulvaney can stay as acting director indefinitely. If the pick is withdrawn, he gets a fresh 210 days before a new one must be named. That process can be repeated for a second nominee.

A look at the vacancies act reveals a provision that would allow an acting director to serve not just two 210-day stints, but three, if two successive nominees are rejected, withdrawn or returned to the president by the Senate. Nominations in the Senate are carried over between sessions only if they pass unanimous consent.

Democrats highlighted Kraninger’s lack of experience in the consumer protection field as they responded to the pick. 

“Working families need a CFPB Director who will fight for them,” Senate Banking Committee ranking member Sherrod Brown said in a statement Monday. “For months I have called for a CFPB Director with a track record of holding Wall Street and payday lenders accountable. The White House should pick an experienced, serious, independent leader.”

Senate Banking has jurisdiction over the nomination.

House Minority Leader Nancy Pelosi said Kraninger’s “apparent lack of experience in consumer finance raises serious questions about her ability to lead the agency.”

But CFPB watchers see the pick as a strategic move.

“I think there’s a strategy here that is steeped in the lore of federal appointments,” said Morrison & Foerster attorney Oliver Ireland.

“It’s a little unusual to see a new name come in at this stage of the game,” Ireland said of the little-known Kraninger. “It could be that this is a play to keep Mulvaney in there longer.”

Ed Groshans, managing director for the financial securities group at Height Capital Markets, sees Kraninger’s nomination as practically an announcement that Mulvaney could be at the bureau not just through the end of this year, but through the end of 2019.

The nomination of the unknown Kraninger appears to be a ploy, he said. After all, names like J. Mark McWatters, chairman of the National Credit Union Administration, and Republican Rep. Darrell Issa of California had been floated for the high-profile CFPB post.

“I’m just going to say this is rather beautiful,” Groshans said, stressing his comment is a political judgment rather than a policy one.

Mulvaney has had his 210 days at the CFPB, and presuming that Democrats continue to slow-walk all nominations, it could be 120 days before Kraninger comes up for a vote, he surmised. Kraninger could be rejected or she could withdraw, starting a new 210-day clock for Mulvaney.

“Now I’m at 540 [days]. Add another 120 on there, I’m at 660,” he said of the prospect for a second nominee. “That’s almost two full years of Mulvaney.”

Practically speaking, that will give Mulvaney time to rewrite the bureau’s payday lending rule, which was issued by his predecessor Richard Cordray shortly before he left office last November. Many Republicans dislike the rule, but a deadline for a Congressional Review Act repeal passed last month, apparently because of opposition from at least a couple of moderate Republicans in the Senate. The payday rule would regulate certain lenders charging interest rates exceeding 36 percent on short-term, small-dollar loans generally backed up by a borrower’s next paycheck.

Mulvaney’s actions to date have been helpful to the payday and auto title lending industries, so his staying on board would be good for those companies going forward, Groshans said.

Richard Hunt, president of the Consumer Bankers Association, tweeted that Kraninger “is what I describe as a ‘clean up the mess’ pick.” Hunt has been the most persistent industry champion of replacing the CFPB’s strong director structure with a five-person bipartisan commission similar to the Securities and Exchange Commission.

But the 2010 Dodd-Frank financial overhaul made the CFPB director removable only “for cause” by the president, and instilled the director with wide powers at the financially independent agency.

Activists object

Activists, including the National Consumer Law Center, also said Kraninger lacked experience. The law center worried about the politics behind the pick, pointing out in a news release Monday that even if Kraninger is withdrawn or rejected by the Senate, that merely starts another 210-day clock for Mulvaney to remain as acting director.

F. Paul Bland Jr., executive director at Public Justice, said Kraninger “is mostly a cipher,” since there don’t appear to be any writings, speeches or other materials from her on consumer finance.

“I don’t want to reflexively, immediately say I’m opposed to her because she’s worked with Mulvaney,” he said. “Mulvaney’s been a catastrophically bad leader of the agency. He has gutted it and undermined it at every step.”

“Unless there’s strong reasons to believe that she’s going to be a very different kind of leader, then, yes, I expect she’ll be fiercely opposed,” Bland said.

Mulvaney’s tenure at the CFPB has made headlines as he announced that he would pull back from what he called Cordray’s “pushing the envelope” style of enforcement, review high-profile rules, end enforcement actions and lawsuits and reorganize the agency.

Mulvaney has infuriated Democrats with a slowdown in enforcement actions, a pause in information collection on mortgages and other financial activity, his apparent plan to rewrite the payday rule and a slashing of the agency’s typical quarterly budget requests.

Any delay by Democrats favors the White House, Ireland said. The longer Kraninger’s confirmation is delayed, the longer Mulvaney stays at the CFPB and the further into the next administration Kraninger’s five-year term would extend.

If Trump isn’t re-elected, the next Democratic president would be stuck with Kraninger for most of his or her term; if Trump is re-elected, he’ll get to appoint a new director to a five-year term toward the end of his presidency.

“It’s a double win” for the White House, Ireland said.

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