By Ryan Rainey
March 21, 2017 at 3:43 pm ET
President Donald Trump could fire Consumer Financial Protection Bureau Director Richard Cordray by getting legal justification from the Justice Department, according to a GOP lawmaker who’s critical of the CFPB’s structure.
Rep. Ann Wagner of Missouri, the chairwoman of the House Financial Services Subcommittee on Oversight and Investigations, said at a Tuesday hearing that the Office of Legal Counsel could provide an avenue to dismiss Cordray. She noted that the OLC gave the Clinton administration justification to avoid enforcing laws that it considered unconstitutional.
That approach was supported by Ted Olson, a partner at the law firm Gibson, Dunn & Crutcher who is representing the mortgage servicer PHH in its effort to overturn the CFPB’s single-director structure. He said Dodd-Frank’s language, which only allows the president to fire the director on a “for cause” basis, would likely fall under the category of unconstitutiona
“I believe the president has the responsibility to the Constitution, not to an unconstitutional statute,” said Olson, who served as solicitor general during the George W. Bush administration. “The Office of Legal Counsel in the Justice Department repeatedly has opined that the president has the responsibility to protect the Constitution, and that is inclusive of protecting the prerogatives and authority of the Congress and the executive branch.”
Olson argued, in line with PHH’s case, that the CFPB’s current single-director structure is unconstitutional because the 2010 Dodd-Frank Act stripped the president of his right to make personnel decisions by limiting presidential power to dismiss the agency’s director. One of PHH’s key goals, which now has the Justice Department’s backing, is to persuade the U.S. Court of Appeals for the District of Columbia Circuit to sever the Dodd-Frank language that outlines grounds for for-cause dismissal.
Brian Knight, a senior research fellow at the libertarian Mercatus Center who has been critical of the CFPB structure, said in an interview that the OLC option makes sense but would likely lead to Cordray immediately suing Trump. Such a move would bring up many of the same questions that are being litigated in the PHH case, he said.
“While relying on OLC to justify or assert an inherent authority to remove Cordray is a reasonable option, it would not speed up resolution because that would immediately be litigated,” Knight said.
Following Tuesday’s hearing, Wagner declined to say if she would prefer the administration fire Cordray for cause or use the OLC process to justify an at-will dismissal. She said Trump can justify a for-cause firing for Cordray by basing his decision on Republican complaints of lavish spending and accusations of discrimination among CFPB personnel.
Brianne Gorod, chief counsel of the Constitutional Accountability Center, said during the hearing that she doesn’t agree with the suggestion that Trump has the inherent constitutional authority to fire Cordray.
Gorod, who is representing House Democrats as a “friend of the court” in the PHH case, said it would be unwise to give the president unlimited power to remove government officers. She added that an independent, bipartisan commission would be no less accountable to the president than the CFPB’s current structure.
Ryan Rainey previously worked at Morning Consult as a reporter covering finance.