Trump's legal argument for hijacking CFPB written by lawyer for payday lender being sued by CFPB

The foxes, they are taking over every hen house in the land. A legal power struggle is taking place today at the Consumer Financial Protection Bureau where Mick Mulvaney, popular vote loser Donald Trump's Office of Management and Budget director, is squatting as acting director while the duly appointed director, Leandra English, has sued to keep her post.

Mulvaney has gone so far as to tell CFPB staff to "disregard any instructions you receive from Ms. English in her presumed capacity as Acting Director." Mulvaney is there largely on the legal advice provided by the White House's Office of Legal Counsel. And look who wrote that memo, David Dayen discovers.

Steven A. Engel wrote the memo for OLC, which has been criticized by academics for seeking a conclusion and working backward to justify it. Engel was confirmed as an assistant attorney general earlier this month by a voice vote in the Senate.

But in July 2015, Engel was one of two lead counsels for NDG Financial Corp., a Canadian payday lender that CFPB cited for running a nine-year scheme to use its foreign status to offer U.S. customers high-cost loans that were at odds with state and federal law. “We are taking action against the NDG Enterprise for collecting money it had no right to take from consumers,” said CFPB Director Richard Cordray at the time. Engel was active in the case up until August of this year.

The revelation underscores the extent of industry infiltration of the structure designed by Congress—a single permanent director who can only take office upon appointment by the president and confirmation by the Senate—to keep the consumer watchdog independent of the industry it is set up to regulate, and buttresses the original intent of the lawmakers who established the agency.

Engel's Linkedin profile shows that he was still employed by the firm that is representing NDG Enterprise in this case with the CFBP that is currently active before the courts. The CFPB has sued the Canadian company for illegally collecting "loan amounts and fees that were void or that consumers had no obligations to repay, and falsely threatened consumers with lawsuits and imprisonment." The company is based in Canada with offices in Malta. It, David Dayen reports, "did not have the legal right to debit accounts to collect payday loans in the U.S., but […] hid behind their foreign status to claim that they were exempt from various limitations and statutes."

 

Backing up Engel's memo was one from the CFPB’s general counsel, Mary McLeod, which agreed with Engel's argument based on faulty legal arguments and possibly internal disgruntlement with the politics of Richard Cordray's choice of English as his successor. Neither argument addresses the fact that the clear language of the statute creating the CFPB gives the line of succession. It was written this way on purpose—to keep the agency's independence and to protect it from exactly this kind of presidential take-over attempt.

Engel, by the way, isn't the only point of conflict of interest in this story. One of Mulvaney's longtime congressional aides and up until earlier this year his chief of staff, Natalee Binkholder, just happens to be a lobbyist for Santander, a big bank. A big bank that could be facing sanctions from the CFPB because it is alleged to have overcharged consumers on auto loans. The CFPB has been preparing to sue Santander, a suit that Mulvaney could be in a position to kill.

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