When Mick Mulvaney announced plans to hire political appointees to work at the Consumer Financial Protection Bureau, many viewed that as antithetical to the workings of an independent regulator. Political appointees don't work at the banking agencies, they said.
And that is true. The regulators are traditionally staffed with non-political career employees. But legal experts say that distinction may be just tradition more than anything else. Technically speaking, there is nothing stopping Mulvaney, the CFPB's acting director, from hiring as many political appointees as he wants.
"The director has the authority to hire anybody he wants as long as they meet minimal criteria such as citizenship," said Richard Horn, of Richard Horn Legal, who is a former CFPB senior counsel and special adviser.
Mulvaney, the White House budget director who was named by President Trump to head the CFPB last month, has said he plans to bring political staffers on board to pair them with career officials who run CFPB divisions. Although Mulvaney had called for a
Observers said Mulvaney's experience running the White House Office of Management and Budget gives him the expertise on how to utilize political staffers at the CFPB.
"You can salt away a small army at an agency using different mechanisms because the coin of the realm is the paycheck and the power, and [Mulvaney] can get them," said Paul C. Light, a professor of public service at New York University's Robert F. Wagner Graduate School of Public Service. "There are a lot of ways to get people into government at the top and while it's not an infinite number, [Mulvaney] will get a dozen, maybe two dozen, political appointees and he knows how to do it, so the question will be, who does he pick?"
At a
For "every major branch of CFPB — enforcement, rulemaking, education, legal, maybe somebody in the Northeast division, somebody in the Southeast division, somebody out West," Mulvaney told reporters.
A CFPB spokesman did not respond to requests for comment.
Although Mulvaney did not specifically use the words "political appointee," and instead used the term "political position," some critics are concerned that he will try to copy the structure of the OMB, which is a subdivision of the White House. Such a structure would be unusual at a financial regulatory agency, and would feed fears that the agency will lose its independence.
Jeff Hauser, the executive director of the Revolving Door Project at the left-leaning Center for Economic Policy and Research, said Mulvaney's call to hire more political staffers was unusual among financial regulators.
"It means [Mulvaney] is going to create patronage jobs for ideologically reliable people," Hauser said. "This is unusual because an independent agency is not designed to allow this kind of patronage hiring process. This has not happened at the Federal Reserve."
Under the Dodd-Frank Act, which established the bureau, the director of the CFPB is the only Senate-confirmed political appointee. That tracks with other banking agencies where there are few if any political appointees elsewhere than the very top.
But experts said Mulvaney has wide latitude to bring aboard political staffers.
"There is no discussion of political appointees in Dodd Frank" but "the director can hire whom he wants and establish the positions he wants," said Gregory Hesse, a partner at Hunton & Williams. "How many political appointees are needed? That's an unknown question."
Generally speaking, there are hundreds of political appointments that do not require Senate confirmation. They range from senior executive service jobs, such as deputy assistant secretary and deputy director positions, to so-called Schedule C positions that are exempted from competitive service requirements because of their confidential or policy-determining character. Individuals in these posts are often close aides to those in charge of agencies or programs and have job titles like special assistant to the director.
The term "political appointee " typically refers to the roughly 1,200 senior positions that are filled by presidential appointees after a new president takes office. Of those, roughly 620 are key positions requiring Senate confirmation, according to the Partnership for Public Service’s Center for Presidential Transition.
But beyond that, experts estimate, are thousands of lower-level jobs, typically civil-service positions, that a presidential administration can fill with a political appointee if they become vacant.
Mulvaney also has no limit simply on the number of politically-connected staffers he can hire at the CFPB, whether they are technically hired as political appointees or not.
"He can hire politically connected people and there were many at the CFPB who were politically connected to the Obama administration or to [CFPB architect] Sen. Elizabeth Warren," said Horn.
Any substantive impact Mulvaney has on the agency personnel will only feed criticism about his own appointment. His role is still being challenged in court by Leandra English, who was named deputy director of the CFPB by outgoing Director Richard Cordray, which she argues makes her the rightful director until President Trump nominates a permanent director. A hearing in the case is scheduled for Dec. 22.
Some lawyers and former CFPB officials are concerned that the changes Mulvaney makes will set a precedent that threatens the independence of other federal banking agencies.
"We are walking on a slippery path with the professionalism and independence of our nation's financial regulatory system at risk," said Christopher Peterson, a law professor at the University of Utah's S.J. Quinney College of Law, and a former special adviser to former CFPB director Richard Cordray. "Both consumers and CEOs of our largest banks are fools if they are not deeply concerned about Donald Trump having a direct line of political control into the CFPB's enforcement office. Do they think Donald Trump is their friend? What about the next president."
