The Otoe-Missouria Tribe is among a number of tribes engaged in the online lending industry. Photo by Jane Daugherty
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Agency that targets tribal lenders faces leadership test as rivals claim control

A leadership struggle is emerging at the Consumer Financial Protection Bureau, the independent federal agency that has targeted tribal lenders.

On Friday, President Donald Trump appointed Mick Mulvaney as the "acting" director of the agency. But shortly before Trump took action, the outgoing director, Richard Cordray, claimed the authority to designate his deputy as his successor.

Leandra English, the deputy director at the CFPB, is now suing Trump and Mulvaney in federal court. She is seeking a temporary restraining order in order to prevent the new administration from taking control of the agency.

"Ms. English has a clear legal entitlement to the position of Acting Director of the CFPB. At the moment that Director Cordray’s resignation became effective, she was the agency’s Deputy Director, a position created by Congress through the Dodd-Frank Act," a memorandum filed on Monday morning states. The Dodd-Frank Act is the federal law that created the agency.

The White House had not responded to the lawsuit as of late Monday morning but officials told news organizations that Trump has the power to name Mulvaney as the director. The Department of Justice also issued a legal opinion on Saturday that backed the president's power to install someone of his choosing.

If the courts side with Trump, Mulvaney would succeed Cordray, who announced his resignation earlier this month and departed on Friday after leading the consumer regulatory agency for five years.

Tribal leaders have criticized Cordray for filing lawsuits against their lending companies and imposing new limits on loans issued by tribal institutions. A new director could take the CFPB in a different direction on a variety of issues, something Trump hinted at on Friday.

"The President looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities," Trump said in his announcement.

A day later, Trump took to Twitter to explain his view of the CFPB. He said the agency was a "total disaster as run by the previous Administrations pick. Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!"

The upheaval comes as tribes await the outcome of Great Plains Lending v. Consumer Financial Protection Bureau. In the case, the 9th Circuit Court of Appeals ruled that the agency has the authority to investigate tribal lending businesses even though tribes aren't mentioned anywhere in the Dodd-Frank Act.

"We have consistently held that similar laws of general applicability govern tribal entities unless Congress has explicitly provided otherwise," Judge Johnnie B. Rawlinson wrote in the unanimous 20-page decision.

Tribal lenders have asked the U.S. Supreme Court to overturn the decision and their petition will be considered at a closed-door conference on December 8, according to Docket No. 17-184. An announcement from the justices, on whether they will hear the case, is expected sometime after that conference.

Additionally, tribes are waiting to see how the new administration will carry out a rule that imposes limits on loans extended to consumers. Although Cordray finalized the rule last month, it's not due to go into effect for another 21 months, gives tribes and other lenders an opening to pursue changes.

Read More on the Story:
Showdown over top post at key watchdog agency (CNN November 27, 20170
Leandra English, the woman at the center of a White House battle for control of the CFPB, files lawsuit against Trump pick to lead watchdog agency (The Washington Post November 26, 2017)
Battle for Control of Consumer Agency Heads to Court (The New York Times November 26, 2017)
Who Will Be Running Consumer Agency on Monday? It’s Unclear (The New York Times November 25, 2017)
Dueling Appointments Lead to Clash at Consumer Protection Bureau (The New York Times November 24, 2017)

9th Circuit Court of Appeals Decision:
Great Plains Lending v. Consumer Financial Protection Bureau (January 20, 2017)

Federal Register Notice:
Payday, Vehicle Title, and Certain High-Cost Installment Loans (November 17, 2017)

Related Stories:
Tribes see opening under Trump to reshape agency that targets lending industry (November 17, 2017)
Native American Financial Services Association hires new director (September 28, 2016)
Harold Monteau: Tribal lending industry facing major challenges (August 26, 2016)
Tribal lenders face pressure as new rule aims to end 'debt traps' (June 7, 2016)