WASHINGTON — Two people are now claiming to be the rightful leader of the Consumer Financial Protection Bureau.

CFPB Director Richard Cordray's final act to appoint his own interim successor before stepping down — Leandra English, the agency's chief of staff — came hours before the Trump administration named Office of Management and Budget Director Mick Mulvaney as the temporary director.

It is now unclear who is legally entitled to the job, and both appear likely to show up Monday to claim the mantle.

For its part, the Trump administration insisted Saturday that Mulvaney was in charge, claiming that English, now the deputy director of CFPB, works for him.

“Director Mulvaney will be the acting director and will take up his office at the CFPB and begin overseeing the CFPB” on Monday, a senior administration official said on a call with reporters.

Another administration official added that, “We don’t have any reason to think that anything out of the ordinary course will happen.”

Mick Mulvaney, director of the Office of Management and Budget.
The Trump administration named Office of Management and Budget Director Mick Mulvaney as acting director of the Consumer Financial Protection Bureau. Bloomberg News

But Democrats were disputing that claim, arguing that the Trump administration was attempting to unlawfully steal leadership of the CFPB while a permanent successor is nominated and confirmed.

"The Dodd-Frank Act is clear: if there is a CFPB director vacancy, the deputy director becomes acting director. President Trump can’t override that," Sen. Elizabeth Warren, D-Mass.,wrote on Twitter Friday night.

Ultimately, the issue will likely go to the courts.

"There's going to be a court battle, and it has the potential to embroil the Trump administration in another difficult court challenge," said Christopher Peterson, a professor at the University of Utah's S.J. Quinney College of Law and a former CFPB special adviser to Cordray. "This is uncharted territory."

At issue is the language of Dodd-Frank, which says that the bureau's deputy director will serve as acting CFPB director in the "absence or unavailability of the director."

That is different from the earlier Federal Vacancies Reform Act, which generally gives the president the power to appoint any Senate-confirmed individual to the temporary leadership of an independent agency.

The White House said Saturday that the Federal Vacancies Reform Act takes precedence over the CFPB’s statute.

“The Vacancies Act is also there as a way that the president can supersede the way those agencies statutes work,” said a senior administration official. “To us this seems like a pretty clear-cut legal question.”

The administration released a Justice Department memo late Saturday that justified its move.

But lawyers said the question of whether Dodd-Frank, which was more recently enacted, supersedes the Federal Vacancies Reform Act will likely be challenged. The Trump administration also argues that Cordray's voluntary departure doesn't count as an "absence or unavailability."

"The question turns on whether resignation means unavailability," said Andrew Sandler, chairman and executive partner at Buckley Sandler. "It's a real legal issue."

Democrats had already staked out the position that Dodd-Frank trumps the Federal Vacancies Reform Act.

“Ms. English should be allowed to serve as Acting Director until a Director is confirmed by the full Senate, consistent with the process articulated in the law that created the Consumer Bureau,” said Rep. Maxine Waters, D-Calif., the top Democrat on the House Financial Services Committee.

Regardless, the Trump administration moved forward anyway with plans to appoint Mulvaney, saying the president "looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff."

The White House said the Office of Legal Counsel has already weighed in on the matter and determined that Mulvaney can lead the agency. But that is not clear, lawyers said.

"It will take some time to sort this out since the outcome won't be determined until the case has been appealed and decided by the Court of Appeals and, perhaps, the U.S. Supreme Court," said Alan Kaplinksy, a partner at Ballard Spahr. "In the meantime, I suspect things at the CFPB will grind to a screeching halt."

The issue not only impacts the CFPB. By law, the director of the consumer bureau has a seat on the Federal Deposit Insurance Corp. board as well as a seat on the Financial Stability Oversight Council.

The CFPB's press office did not return multiple requests for comment.

Until Friday, there had been no permanent deputy director at the CFPB. The job was filled by David Silberman, the agency's associate director of research, markets and regulation, on an acting basis. But on Friday, Cordray declared that English would be the new deputy director, and he specified she would be in charge after he left later that day.

"In considering how to ensure an orderly succession for this independent agency, I determined that it would be best to avoid leaving this key position filled only in an acting capacity," Cordray wrote in a letter to staff on Friday. "In consultation over the past few days, I have also come to recognize that appointing the current chief of staff to the deputy director position would minimize operational disruption and provide for a smooth transition given her operational expertise."

English has previously held leadership positions at the CFPB, the Office of Management and Budget and the Office of Personnel Management.

Cordray's move was panned by industry representatives and praised by consumer advocates.

Some said it reinforced Republican arguments that the CFPB's single-director structure is unconstitutional, a key issue currently being decided by a federal appeals court.

“Today’s actions by former CFPB Director Richard Cordray in appointing his own acting director to lead the bureau reinforces the problematic nature of having a single and completely unaccountable leader," said Chris Stinebert, president and CEO of American Financial Services Association, an industry trade group.

But consumer groups said Cordray was acting within his rights.

“There are two schools of thought,” said Mike Calhoun, president of the Center for Responsible Lending. “We believe that the Dodd-Frank Act specifically provides that it’s the deputy director” that leads the CFPB in the interim.

Calhoun said President Trump should go through the normal process of nominating a CFPB director who can be confirmed by the Senate.

“The Republicans control Congress and the Senate and the White House and they can nominate and process through the Senate their nominee," Calhoun said.

Richard Hunt, president and chief executive of the Consumer Bankers Association, said that, regardless, Trump will eventually wrest control of the bureau.

"At the end of the day there will be a Republican running that place, whether it's Monday, or February or June," Hunt said, "and Cordray's last action will only infuriate Republicans more to eliminate the CFPB."

Updated November 25, 2017 at 12:00PM: This story is being constantly updated based on new information. Please check back frequently for the latest information.