White House CFPB memo written by Payday Lender Attorney

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The lawyer who wrote the Office of Legal Counsel’s memo supporting the Trump administration’s view that the President can appoint Mick Mulvaney as acting director of the Consumer Financial Protection Bureau, which represented a payday lender before the CFPB last year.

Steven A. Engel wrote the memo for OLC that was criticized by Academics to find a conclusion and work backwards to justify it. “Let’s face it, this is an argument where you get the answer and then you go to the other side of the equation,” said former MP Barney Frank, D-Mass., A lead author on the Dodd-Frank Act. which the CFPB created. Angel was Approved as Deputy Attorney General earlier this month by one vote in the Senate.

However, in July 2015, Engel was one of two lead counsels for NDG Financial Corp., a Canadian payday lender who CFPB cited for conducting a nine-year program to use his overseas status to offer US customers costly loans that were in violation of state and federal laws. “We are taking action against the NDG Enterprise because it has collected funds that it had no right to take from consumers,” said CFPB director Richard Cordray at the time. Engel was active in the case until August of this year.

The reveal underscores the degree of industrial infiltration of the structure designed by Congress – a single permanent director who can only take office after appointment by the President and approval by the Senate – to keep consumer oversight independent of the industry it is supposed to and regulate underpins the original intent of the legislators who created the agency.

CFPB alleged that NDG, which makes and collects payday loans online, “falsely threatened” consumers that failure to pay would result in garnishment, arrest or detention. The company’s network of companies, based in Canada and Malta, did not have the legal right to debit accounts to collect payday loans in the US, but they hid behind their foreign status and claimed to be exempt from various restrictions and laws. The case is still active in federal court in New York.

Engel represented the defendants in the CFPB trial not until this Augustwhen US District Judge Colleen McMahon urged judges in Canada to compel Canadian banks to testify. Engel was a partner at the Dechert law firm at the time. He has been nominated as the Assistant Attorney General for OLC February of this year.

The fact that a former CFPB opponent is weighing up who is the agency’s legal acting director raises questions about Engel’s independence and a potential conflict of interest.

In the OLC memo, Engel argued that the Federal Vacancies Reform Act allows President Donald Trump to appoint Mulvaney as acting director of the CFPB in place of the current deputy director Leandra English. English has the answer in English sued the President and Mulvaneyto seek an injunction to prevent the appointment.

The situation has wreaked havoc within the agency tasked with protecting consumers from unscrupulous financial products. The CFPB General Counsel, Mary McLeod, gave a three-page memo over the weekend, he agreed with OLC’s stance, saying that staff should “act consistently, understanding that Director Mulvaney is the acting director of the CFPB”. McLeod relied heavily in their analysis on the OLC memo, which was bitterly contested by several Legal scholar.

Some have suggested that Domestic politics Played a role in the memo from the General Counsel of the CFPB, with a split between those who want to play nice with the new regime and those who want to keep the agency’s independence. There is further discussion of dissatisfaction in the building with the English selection via former Deputy Director David Silberman.

Proponents of English as the right director argue that the House of Representatives specifically approved the Federal Vacancies Reform Act, as amended, to regulate succession, while the Senate did not. In the conference committee, the negotiators opted for the Senate version, suggesting that Congress knew how to use the FVRA, but actively voted against it. Calling the argument “unconvincing,” McLeod argued that the Senate language was chosen simply because his version of the Board of Directors prevailed.

Frank told The Intercept that the Senate language was his preferred approach from the start, but he had turf issues with then-chairman of energy and trade, Henry Waxman, D-Calif.

The house version wasn’t what I wanted. Waxman was chairman of the Energy and Trade Committee, he was well aware of the turf. He was concerned that the consumer association was given more powers than the FTC, which was under its jurisdiction. He was concerned that the CFPB would somehow overwhelm the FTC. I wanted to give them that power. Waxman wanted a five-person commission. I got a compromise of a single director to start with, and then the commission. The Senate went with a single director. When we went to the conference committee, I gave in without a fight. Therefore, the Senate language is more relevant. I didn’t have the votes in the house for a single director. I had her on the conference committee. The Senate language reflected what Senator Dodd and I preferred.

The succession plan is part of Congress’s intention to keep the agency independent from the president, Frank said. “We gave the director unusual independence from the president, including a five-year term. These [provision] makes it effective, ”said Frank. “Our intention was to grant independence for a full five years. That was part of it. “

The president still has the option of appointing a successor, Frank said, but only one who wouldn’t destroy the agency since such a candidate won’t get through the Senate. “As it works, the incumbent director remains in office until a confirmed successor is appointed. I don’t think the Senate would approve someone like Mulvaney who would destroy the agency. Remember, Senator Collins is in there and she voted for it. Republicans would like to legislate on the agency, but they don’t have the votes, ”he said.

Former Rep. Brad Miller, DN.C., the foremost proponent of CFPB provision in the House of Representatives, also said it was the intent of the bill writers to keep the acting director independent from the president. “We were very much concerned with the task of creating an independent agency that would not be captured by its adversaries,” he said. “The statutes are pretty clear. What happens if the director’s position becomes vacant, the deputy director steps in and serves until the Senate approves a replacement. “

Democrats have historically respected the process for other agencies with similar succession plans, including the Federal Housing Finance Agency. “We did the same with the FHFA. There was a desire to get rid of it [then-FHFA Acting Director Edward] DeMarco, ”Miller recalled in an interview with The Intercept. “We couldn’t find a way because the statutes were really clear. It was said that if a position was vacant, the law had to be confirmed by the Senate. The president simply cannot appoint anyone to serve. It’s the same here, there is a clear legal succession. “

Laurence Tribe, a renowned constitutional scholar at Harvard Law School, agreed that the statute is clear.

The OLC, stored in the memo [over the weekend], in his credit, admits that the references to unavailability and absence include vacancy. You are not trying to argue that the law does not cover this. You’re trying to have it both ways. They argue that the President retains an option under the Federal Vacancies Reform Act to override subsequent laws. You’re trying to have half a loaf and make a whole loaf out of it. It’s an interesting position, but it’s collapsing. It’s completely incoherent. Laws are not usually written that way.

Senate minority leader Chuck Schumer, DN.Y., pushed back against the Mulvaney selection. “The succession process laid down in Dodd Frank is clear: Leandra English, not Mick Mulvaney, is the acting director of the CFPB. In attempting to appoint Mr. Mulvaney as director, the Trump administration is ignoring the established, proper, legal succession order that we have purposely put in place to put a fox in charge of a chicken coop, ”he said in a statement.

The Justice Department did not respond to a request for comment on Engel and whether he should have withdrawn from CFPB affairs.

For Miller, the battle for CFPB has resulted in a broader business effort to make regulators more independent. “It’s a bigger fight. It kind of gathered. The right wing has long tried to scratch its independence. This is part of that struggle. Do I think Trump is very eager about certain vacancies? No. People with whom he has staffed his administration reflexively support what the Business Roundtable wants. They want agencies that are easy to identify, ”he said. “The things that CFPB does are very popular with Americans. The idea that Americans resent their lack of freedom to get predatory financial products is ridiculous. “

Update: November 27, 11:09 a.m.
This story has been updated to include interviews with Barney Frank, Brad Miller, and Lawrence Tribe, as well as a statement from Senator Chuck Schumer.

Photo above: Former director of the Consumer Financial Protection Bureau Richard Cordray says during a hearing before the TARP, Financial Services and Bailouts of Public and Private Programs subcommittee of the House Oversight and Government Reform Committee on January 24, 2012 on Capitol Hill in Washington, DC, off the hearing should focus on the Consumer Financial Protection Bureau.

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