By Ray Birch
NEW YORK—Unsure of the chance for a positive outcome from its lawsuit against the Trump Administration, Lower East Side People’s FCU is certain of one thing—that the CFPB must remain an agency independent of the White House.
That is a key reason behind the $55-million CU’s suit filed in U.S. District Court in Manhattan this week to stop Trump’s appointment of Mick Mulvaney to lead the CFPB, said CEO Linda Levy.
A vacancy was created at the CFPB when Director Richard Cordray resigned; Cordray had elevated Leandra English to deputy director with the assumption she would then take the top spot. English has filed a lawsuit and appeal of her own arguing the Dodd Frank Act, which created the CFPB, is clear in how succession should work at the CFPB. The Trump Administration disagreed, citing the Federal Vacancies Reform Act for the authority to appoint Mulvaney.
In its lawsuit, Lower East Side People’s wants the federal court to remove Mulvaney and affirm that English is properly the person to be leading the CFPB.
“The president is not supposed to be the one who makes the appointment,” Levy told CUToday.info. “The CFPB is supposed to be an independent agency. Mulvaney is obviously not going to be independent of the White House. He was appointed by the president. He is an at-will appointment by the president, so he won’t be independent.”
The suit alleges “regulatory chaos” has been caused by the legal dispute over who is rightfully in charge of the agency.
Levy emphasized that the credit union’s lawsuit is not about the capabilities of the person leading the CFPB, saying the suit is about process.
“There is a process in the (Dodd Frank Act) that clearly states that the deputy director is the acting director until the term of the previous director is up,” Levy said. “There is nothing in the statute that allows the president to make an appointment.”
Levy said the suit is not a statement on the impact on credit unions overall from having Mulvaney lead the CFPB. She stressed, however, that Lower East Side People’s FCU believes having Mulvaney at the helm will be worse for its members.
“Our members need an independent agency,” stated Levy, saying that keeping the agency in the hands of someone, such as English, who does not answer to the White House, is best for her members. Lower East Side People’s serves New York’s Lower East Side.
Lower East Side People’s FCU is the only credit union in the country to file such litigation, and Levy said that the lawsuit was spurred from conversations with consumer groups.
“We are involved with a lot of organizations that fight for consumers’ rights, and when it was brought up that it would be great if someone would do this, we said OK, we are on board,” Levy said.
Levy said that she has yet to receive feedback from the credit union community, and that the Lower East Side People’s currently is not looking for other plaintiffs to join the suit.
“I know there are some people talking about filing amicus briefs, but at this point it’s just us,” she said.
Asked about the chance of wining the case, Levy said it’s far too soon to make any predictions.
“I have no idea; we have not even been assigned a judge yet,” Levy said.
Lower East Side People's, a member of the National Federation of Community Development Credit Unions, is being represented by the New York-based firm of Emery Celli Brinckerhoff & Abady LLP.