Consumer Financial Protection Bureau directors duel over control of consumer agency

WASHINGTON - Mick Mulvaney brought a sweetener to the Trump administration's takeover of the consumer watchdog agency on Monday, offering doughnuts as he challenged the Obama-era acting appointee in a partisan showdown over how to regulate the U.S. financial system.

Mulvaney arrived at the offices of the Consumer Financial Protection Bureau, an agency he tried to dismantle when he was a congress member, with the support of President Donald Trump and a gift to staff who may be uncertain about its future.

A day earlier, Mulvaney was sued by Leandra English, a senior CFPB official who claims that she is the agency's rightful leader. Richard Cordray, the former director, pushed English to the top of the agency late last week in a final move before he stepped aside.

A federal court was due to weigh in on the issue, possibly as soon as Monday.

Trump has a right to name a permanent chief of the CFPB, officials agree. However, there are dueling claims about who gets to lead the agency in the meantime.

The fight to control the 1,600-employee agency lays bare deep divisions between Republicans and Democrats over how to regulate Wall Street and protect consumers, less than a decade after a financial crisis cost taxpayers $700 billion in a bank bailout.

In a morning email, English welcomed staff back from the Thanksgiving holiday and signed off as 'acting director.” Around the same time, Mulvaney installed himself into Cordray's former office and stood his ground.

'Please disregard any instructions you receive from Ms. English in her presumed capacity as Acting Director,” he wrote in an all-staff email seen by Reuters. 'If you receive additional communications from her today ...

please inform the General Counsel.”

Mulvaney signed off as 'acting director” and invited staff to pop by his office on the fourth floor to 'grab a donut.”

Trump, a Republican, campaigned for president saying Wall Street 'gets away with murder,” but at the same time promised to defang or abolish the CFPB, the brainchild of progressive U.S. Senator Elizabeth Warren that was championed by President Barack Obama.

Since taking office, Trump has tried to undo a number of his Democratic predecessor's initiatives, mostly famously the 2010 Affordable Care Act that the Republican-controlled Congress has been unable to repeal and replace.

The CFPB is hated by Republicans, who think it wields too much power and burdens banks and other lenders with unnecessary red tape.

The agency, created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, was established in 2011 in the wake of the 2007-2009 financial crisis to protect consumers from predatory and deceptive mortgage and lending practices.

Cordray developed a reputation for drafting aggressive rules curbing products such as payday loans while issuing multimillion-dollar fines against large financial institutions such as Wells Fargo and Co. According to USA Today, the CFPB claims to have returned almost $12 billion to more than 30 million consumers who were harmed by various bank practices.