Row as two bosses show up for work at US banking watchdog

Trump-appointee Mick Mulvaney tells staff of Washington consumer bureau to disregard rival’s orders

 Mick Mulvaney (on left) leaves the Consumer Financial Protection Bureau  building in Washington on Monday. Photograph: Carlos Barria/Reuters

Mick Mulvaney (on left) leaves the Consumer Financial Protection Bureau building in Washington on Monday. Photograph: Carlos Barria/Reuters

 

The White House brought doughnuts and diktats to an extraordinary public struggle for control of a banking watchdog on Monday as President Donald Trump’s chosen lieutenant sought to wrest from Democratic hands an agency meant to protect consumers.

On a day of turmoil at a usually staid bureaucracy, Mick Mulvaney, a White House official, arrived to take charge of the Consumer Financial Protection Bureau with boxes of Dunkin’ Donuts, a peace offering for an agency he once called a “sick joke”.

But he entered its offices under a legal cloud, as Mr Trump’s decision to make him acting director was challenged in the courts by a rival for the post, Leandra English, who was put forward by an ally of former president Barack Obama.

On Sunday Ms English, who was anointed by the bureau’s outgoing Democratic boss Richard Cordray last week, filed a lawsuit seeking to stop Mr Mulvaney from being installed as the bureau’s head, arguing that she has the authority to take control.

Mr Mulvaney, a sharp-tongued conservative former member congressman, sought to neutralise her power, dropping a warm introductory email to staff in favour of an urgent message ordering them to “disregard” any instructions from Ms English.

The power struggle recalled a tussle for control of the Department of Justice in the first weeks of the Trump presidency and was being watched closely on Wall Street, where banks complain they have been strangled by the agency’s red tape.

With its chain of command in question, lawyers said they were advising financial services clients against reaching settlements with the agency. Allison Schoenthal, partner at Hogan Lovells, said: “If either director tries to do anything significant, it’s going to be challenged.”

Doughnuts

The mission of the agency, which was created by the post-crisis Dodd-Frank act, is to stop financial institutions from ripping off customers.

Until the resignation of Mr Cordray – an Obama appointee who is seen as a likely Democratic candidate for Ohio governor – the bureau was one of the last bulwarks against Mr Trump’s efforts to weaken financial regulation.

Mr Mulvaney, who was confirmed as the White House budget director in February, has described the agency as an unaccountable bureaucracy gone rogue, calling it “one of the most offensive concepts” in the US government.

The White House communications director sought to enhance Mr Mulvaney’s standing on Twitter, sending out a photo of him meeting staff while sporting rainbow-coloured socks and another of near empty boxes of doughnuts, which he said were a “big hit”.

In Mr Mulvaney’s message to staff, he wrote: “It has come to my attention that Ms English has reached out to many of you this morning via email in an attempt to exercise certain duties of the Acting Director. This is unfortunate but, in the atmosphere of the day, probably not unexpected.”

After asking them to disregard Ms English’s instructions, he told staff to report any additional communications from her to the bureau’s general counsel. “I apologise for this being the very first thing you hear from me. However, under the circumstances I suppose it is necessary.”

A person with knowledge of the situation said that general counsel Mary McLeod, who was appointed by Mr Cordray, had told staff to follow the directions of Mr Mulvaney. – Copyright The Financial Times Limited 2017