Small CU takes on Trump

Lower East Side Peo­ple’s FCU takes on the pres­i­dent over lead­er­ship of CFPB.

Credit Union Journal - - Front Page - BY NATHAN DICAMILLO

LOWER EAST SIDE PEO­PLE’S FED­ERAL Credit Union has filed a law­suit against Pres­i­dent Don­ald Trump and Mick Mul­vaney over what the CU sees as a vi­o­la­tion of the con­sti­tu­tion in Mul­vaney’s ap­point­ment to head up the Con­sumer Fi­nan­cial Prote­cion Bureau.

For the $55 mil­lion credit union, “it is plain that [CFPB Deputy Di­rec­tor] Le­an­dra English is the only law­ful act­ing di­rec­tor in charge of the CFPB,” ac­cord­ing to the law­suit that was filed in fed­eral court in Man­hat­tan.

The suit ar­gues that the Dod­dfrank Act re­quires that English should re­main act­ing di­rec­tor un­til the pres­i­dent nom­i­nates and the Se­nate con­firms a new di­rec­tor.

“We sup­port the CFPB as a pro­tec­tor of our low-in­come mem­bers’ fi­nan­cial rights, and fear that the ap­point­ment of an act­ing di­rec­tor be­holden to the White House could re­sult in up­heaval and ul­ti­mate dis­so­lu­tion of this crit­i­cal agency,” said the credit union’s CEO, Linda Levy, in a press re­lease. “Hav­ing ex­pe­ri­enced the dev­as­ta­tion that the 2008 mort­gage cri­sis wreaked on our low-in­come mem­bers, we need

the CFPB to pro­tect com­mu­ni­ties tar­geted by fi­nan­cial preda­tors.”

The small Man­hat­tan-based credit union’s suit ar­gues that Trump’s ap­point­ment has thrown fi­nan­cial in­sti­tu­tions “into a state of reg­u­la­tory chaos.”

Mean­while, both CU trade groups have al­ready rec­og­nized Mul­vaney over English as act­ing di­rec­tor.

“While Lower East Side Peo­ple’s Fed­eral Credit Union is not a mem­ber of NAFCU, we were sur­prised to see the law­suit,” said Dan Berger, pres­i­dent and CEO of NAFCU, in a state­ment. “Since the CFPB’S in­cep­tion, NAFCU has worked with the bureau to en­sure credit unions’ needs are heard. We look for­ward to con­tin­u­ing to re­duce un­nec­es­sary reg­u­la­tory bur­dens on credit unions, in­clud­ing reg­u­la­tion pro­mul­gated by the CFPB, as we out­lined in a let­ter to in­terim Di­rec­tor Mul­vaney [re­cently].”

The credit union has 8,500 mem­bers and serves low-in­come, im­mi­grant and other un­der­served com­mu­ni­ties.

JOIN­ING THE FRAY

While it is the only credit union to file suit on this mat­ter, it is hardly alone. English is also su­ing the pres­i­dent over his ap­point­ment of Mul­vaney. For­mer law­mak­ers Bar­ney Frank and Chris Dodd, who drafted the Dodd-frank Act, teamed up to say that the CFPB’S deputy di­rec­tor should serve as the agency’s act­ing di­rec­tor.

“This is a naked, il­le­gal power grab by Don­ald Trump to de­stroy an agency that helps and pro­tects mil­lions of or­di­nary Amer­i­cans,” said Ilann M. Maazel, a part­ner at ECBA, and lead coun­sel for Lower East Side Peo­ple’s Credit Union, in the re­lease. “The law re­quires Le­an­dra English to be CFPB’S Act­ing Di­rec­tor.”

A bevy of states at­tor­neys gen­eral, led by New York’s Eric Sch­nei­der­man, have also sounded off on the is­sue, say­ing that past state­ments by Mul­vaney about the Bureau should dis­qual­ify him from lead­ing the agency.

“We are very con­cerned by the widely re­ported state­ments that your choice for act­ing di­rec­tor of the agency, Mick Mul­vaney, has made about the role of the agency, call­ing it ‘a joke…in a sick, sad kind of way,’ and ‘an aw­ful ex­am­ple of a bu­reau­cracy that has gone wrong,’” the AGS said in a re­cent let­ter. “Such state­ments about an agency that has helped mil­lions of Amer­i­can con­sumers and achieved fun­da­men­tal re­form in a num­ber of crit­i­cally im­por­tant ar­eas of Amer­i­can com­merce are cat­e­gor­i­cally false, and should dis­qual­ify Mr. Mul­vaney from lead­ing the agency, even on an act­ing ba­sis.”

The let­ter is the lat­est at­tempt by Democrats to un­der­mine Mul­vaney, who re­ports di­rectly to Trump as head of OMB but was tapped to also lead the in­de­pen­dent agency de­spite his re­peated crit­i­cisms of it.

If Mul­vaney tries to stop the CFPB’S staff from pur­su­ing fraud and abuse, Sch­nei­der­man said state at­tor­neys gen­eral will step up to the plate.

“If in­com­ing CFPB lead­er­ship pre­vents the agency’s pro­fes­sional staff from ag­gres­sively pur­su­ing con­sumer abuse and fi­nan­cial mis­con­duct, we will re­dou­ble our ef­forts at the state level to root out such mis­con­duct and hold those re­spon­si­ble to ac­count,” the AGS’ let­ter stated.

Pres­i­dent Trump is fac­ing an­other law­suit over his ap­point­ment of Mick Mul­vaney to head up the Con­sumer Fi­nan­cial Pro­tec­tion Bureau, this one from a small credit union in Man­hat­tan.

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