The Department of Justice not only opposed but moved to dismiss a preliminary injunction motion filed by Lower East Side People’s Credit Union against President Trump and Mick Mulvaney challenging Mulvaney’s appointment as CFPB acting director.
The DOJ believes that the CU has not established Article III standing. The department argued on Dec. 22 that simply being a regulated entity of the CFPB “does not satisfy the requirements of injury in fact, causation, and redressability.”
The credit union claims that Mulvaney’s appointment has thrown the CU industry into regulatory chaos.
“The credit union and all credit unions are really in a state of regulatory limbo,” Ilann Maazel, a partner at Emery Celli Brinckerhoff & Abady LLP, and lead counsel for the CU, told Credit Union Journal. “Because you have one person claiming to be the acting director, but the law does not seem to be on their side. It creates chaos and confusion. You can't have any confidence in anything that Mr. Mulvaney does is legal.”
The DOJ argued that the CU should not have uncertainty about Mulvaney’s authority since both the CFPB’s general counsel and the Credit Union National Association have supported Mulvaney as acting director.
The DOJ also argued that the Federal Vacancies Reform Act refers directly to vacancies and resignations while the Dodd-Frank Act contains no such language.
“The Act’s instruction that the Deputy Director ‘shall . . . serve as acting Director in the absence or unavailability of the Director,’ id. § 5491(b)(5), does not clearly apply to resignations and vacancies," the DOJ's motion reads. "And even if it did, the statute’s use of the term ‘shall’ does not clearly mean that it displaces the FVRA, instead of operating alongside it as other similar statutes do. That conclusion is consistent with the presumption against implied repeals.”
This is in direct contrast to claims made by the CU’s legal counsel.
“If you read the two acts together, it's clear that the deputy director has to become the acting director,” Maazel said. “Because the Dodd-Frank act is mandatory, and the FVRA allows for other statutes to takeover.”
In its motion, the Justice Department said the credit union must show a “clear and manifest” intent in Dodd-Frank to displace the FVRA.
Lower East Side People's CU also argued that the president could not appoint Mulvaney because the director of the CFPB is automatically a member of the Federal Deposit Insurance Corporation board of directors. The DOJ pushed back against this claim because the CFPB director serves on the board in an ex officio position.