Credit Union Not Subject to CFPB Supervision Sues over CFPB Acting Director

A credit union recently sued the President and his appointed CFPB Acting Director, Michael Mulvaney, in New York federal court, claiming that the President has attempted an illegal and hostile takeover of the CFPB, purportedly throwing the credit union and others into a state of regulatory chaos.  The credit union seeks a declaratory judgment from the court that Leandra English is the Acting Director of the CFPB.

In addition to mirroring the legal arguments from English’s own lawsuit that is pending in D.C., the credit union alleges that under the Federal Vacancies Reform Act (FVRA), the President cannot appoint an Acting Director to an independent multi-member board or commission without Senate approval.  Because the Acting Director of the CFPB is an ex officio member of the board of the FDIC, an independent agency, the credit union asserts that the President’s appointment of Mulvaney as Acting Director is unconstitutional.

Finally, the credit union claims it has a compelling interest in immediately resolving this regulatory uncertainty because it is “regulated” by the CFPB.  The credit union lists two examples:  it must comply with the CFPB’s “Know Before You Owe” mortgage disclosure rules, and it must comply with the CFPB’s Ability to Repay and Qualified Mortgage Standards under TILA.  Yet the CFPB generally lacks supervisory authority over insured depository institutions with total assets of up to $10 billion in assets, and public records indicate that the total assets of this particular credit union do not approach that threshold.

The case is Lower East Side People’s Federal Credit Union v. Trump, et al., Case No. 1:17-cv-09536 in the U.S. District Court for the Southern District of New York.