Court Rules That Credit Union Lacks Standing to Challenge Mulvaney Appointment at CFPB

Late last week a federal judge ruled that the Lower East Side People’s Federal Credit Union failed to show it had standing to sue President Trump over his appointment of Mick Mulvaney to temporarily head the Consumer Financial Protection Bureau following the resignation of Richard Cordray. The ruling comes just days after CFPB Deputy Director Leandra English appealed the denial of her own injunction against Mulvaney, arguing she was the lawful interim successor to Cordray.

The court found that the credit union failed to demonstrate it had met the requisite standards to bring suit against Trump and Mulvaney over the CFPB leadership transition. The judge decided that standing did not exist simply because the credit union falls under the regulatory umbrella of the CFPB or because the certain policies proposed by Mulvaney might harm the mission of the community bank.

Further, the court refused to elevate the tenuous connection between relaxed reporting standards under the Home Mortgage Disclosure Act (HDMA) and potential reduced deposits into the credit union. That injury was too speculative to meet the court’s requirement that there be an “imminent injury.” Besides, the harm in that instance came from third-party banks and mortgage providers potentially falsifying mortgage information, not the consumer agency’s approach to community reinvestment enforcement.

Finally, the agency’s proposed rulemaking to readdress HDMA could not be used to claim standing, since the proposal came after the complaint was filed. Without demonstrated harm, the credit union ultimately could not justify its lawsuit before the judge.

The CFPB, its leadership, and structure have all been the topics of frequent litigation and judicial opinions since the agency’s former director, Richard Cordray, announced in November he would step down to run for governor of Ohio. Just last week, an en banc D.C. Circuit Court ruled that the structure of the Consumer Financial Protection Bureau (CFPB) is constitutional, overturning a panel decision last year that found the CFPB’s director must be fireable “at will” by the President to conform with the U.S. Constitution. And Cordray’s hand-picked successor, Leandra English, continues to battle Mulvaney for control in the courts as well.

While senior management at the CFPB have mostly accepted Mulvaney’s authority, some rank and file bureaucrats have pushed to unseat the temporary director. With Mulvaney seeking to reassess major rulemakings and policies developed by Cordray, the new chief is making friends and enemies in Washington and the financial services sector.