Credit Union Says Trump Has Sown Chaos at CFPB

Taken from a video uploaded by the White House in April 2017, this image shows Mick Mulvaney standing in front of federal regulations he says were created in the last two years. Mulvaney was director of the White House budget at the time but was appointed last month to take over the Consumer Financial Protection Bureau.

MANHATTAN (CN) – Calling the president’s appointment of his budget director to head of the U.S. Consumer Financial Protection Bureau unconstitutional, a federal credit union says in a complaint that the political intrusion puts its members at risk.

Represented by the firm Emery Celli, the Lower East Side People’s Federal Credit Union accuses President Donald Trump in the Dec. 5 complaint of “an illegal hostile takeover of the CFPB.”

Filed with a federal judge in Manhattan, the action comes roughly a week after a court in Washington rejected a similar challenge by Leandra English, the CFPB acting director whom Trump replaced with Mick Mulvaney.

English’s challenge, which remains ongoing despite having failed to get a court order that would keep her in office, hinges on confusion about which law controls the issue of succession at the CFPB.

Relying on the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB in 2010, English became acting director when her predecessor, Richard Cordray announced his resignation on Nov. 15.

Trump appointed Mulvaney meanwhile under a 1988 law called the Federal Vacancies Reform Act.

Though critics say Trump’s actions undermine the intent by Congress to keep the CFPB independent, U.S. District Judge Timothy Kelly in Washington denied English a temporary restraining order, saying the merits of her case had a poor outlook.

Tuesday’s challenge in New York takes a similar tack, saying that Trump has thrown  credit unions and banks across the country “into a state of regulatory chaos.”

“Even worse, defendant Trump has purported to appoint an acting director whose mission is to destroy a bureau that protects thousands of the credit union’s members,” the complaint states.

As evidence of this point the credit union quotes Mulvaney’s description of the CFPB as “a sad, sick joke,” and his 2015 testimony before the House of Representatives. “I don’t like the fact that CFPB exists, I’ll be perfectly honest with you,” Mulvaney had said.

After just a week on the job, the credit union says the CFPB’s new director is “already gutting [it], undermining its mission, and reportedly rolling back regulatory protections that protect the credit union’s members.”

“The credit union’s members need the CFPB to protect them against unscrupulous payday lenders, mortgage sellers, and others regulated by the CFPB,” the complaint states. “Unlike defendant Mulvaney, the Credit Union believes in CFPB’s mission, its regulations, and its vital role in protecting American consumers, and creating a level playing field for responsible lenders such as the Credit Union. The appointment of defendant Mulvaney poses an immediate threat to American consumers, including and especially the Credit Union’s vulnerable, low-income membership.”

As a nonprofit financial collective, the Lower East Side People’s Credit Union is owned by its approximately 8,500 members, many of whom are low income and vulnerable to predatory lending practices and other misconduct the Consumer Financial Protection Bureau exists to prevent.

Seeking an injunction and declaratory relief, the credit union is represented by Ilann Maazel of Emery Celli Brinckerhoff & Abady.

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