Biden consumer bureau pick could take over agency on Inauguration Day

President-elect Joe Biden’s pick to lead the Consumer Financial Protection Bureau (CFPB) could temporarily take control of the agency as soon as Inauguration Day thanks to a precedent established by President Trump.

Federal Trade Commissioner Rohit Chopra, whom Biden will nominate to be CFPB director, should be able to step into his role on an acting basis under a law used by Trump to install a temporary chief for the bureau in 2017.

Under the Federal Vacancies Reform Act, the president can appoint any official serving in a Senate-confirmed position to a vacant Senate-confirmed role on an acting basis.

Trump used the Vacancies Act to nominate Mick Mulvaney, then the director of the Office of Management and Budget, to serve as acting CFPB director in 2017 after the bureau’s former chief Richard Cordray resigned. Then-CFPB Deputy Director Leandra English sued Trump, arguing that he illegally blocked her service as the bureau’s temporary leader.

While the Dodd-Frank Act specifies that the CFPB’s deputy director is supposed to lead the agency when it has no Senate-confirmed leader, a federal judge ruled that the Vacancies Act could be used to override that provision. English appealed, but dropped her lawsuit and resigned from the bureau after Trump nominated current CFPB Director Kathy Kraninger in June 2018.

Biden is expected to fire Kraninger, a Republican, if she doesn’t resign before he takes office and can do so thanks to another precedent Trump helped set. The Justice Department and CFPB backed a challenge to the agency’s constitutionality that the Supreme Court resolved in June by striking a provision from Dodd-Frank that limits when the president can fire the CFPB director.

After Kraninger departs, Biden could then appoint Chopra, who was confirmed to the FTC by the Senate in 2018, as the CFPB’s acting director. However, the Vacancies Reform Act bars a current nominee for that position from serving in an acting capacity, so Biden would be forced to nominate a new acting director when he formally nominates Chopra. 

The Hill has reached out to the Biden transition team regarding his plans for the CFPB directorship.

Chopra was previously the assistant director of the CFPB and served as its first student loan ombudsman. He has been fiercely critical of the student loan servicing industry and is considered by financial sector watchdogs as a natural heir to the agency designed by Sen. Elizabeth Warren (D-Mass.).

Updated at 5:49 p.m.