As the Consumer Financial Protection Bureau (CFPB) continues to battle legal challenges to its single-director organizational structure, the bureau recently added five new members to its executive team.
The legal challenges
The constitutionality of the CFPB’s concentration of power in one leader, current Director Richard Cordray, is the subject of an ongoing lawsuit involving mortgage lender PHH Corp.
Accused of using its mortgage reinsurance practices to funnel kickbacks in violation of the Real Estate Settlement Procedures Act (RESPA), PHH has challenged Cordray’s pursuit of a $109 million penalty against the company and its subsidiaries — and as the first company to take the CFPB to task over an enforcement action, has so far prevailed.
In October 2016, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the CFPB’s concentration of executive power in one director — a setup prescribed by the bureau’s implementing law, the Dodd-Frank Act — “not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multimember independent agency.”
“We therefore hold that the CFPB is unconstitutionally structured,” the court ruled. The CFPB is now asking the court for a rehearing on that finding.
Meanwhile, Cordray kicked off the New Year with a change in leadership, announcing five new members of his team. A few have been promoted from within, while others come to the CFPB from other federal government agencies.
“The mix of experience and talent this group brings will provide great value to the bureau as we continue to work on behalf of consumers everywhere,” Cordray said.
The new “CFPB leadership team,” as the bureau called it in a news release, includes:
John McNamara, a 30-year veteran of the debt collection market, who has served as acting assistant director of Consumer Lending, Reporting and Collections Markets, has now been formally given that title. McNamara previously served as the debt collection program manager for the CFPB. Prior to that, he served as chief marketing officer for LiveVox, a cloud contact center solutions provider, and as president, CEO and co-founder of Fidelis Recovery Solutions Inc.McNamara will not oversee mortgage lending in this position, as that area of consumer lending is presided over by the CFPB’s Office of Mortgage Markets, which has had its own leadership changes recently. That office is currently under the direction of Acting Assistant Director Lisa Lauroesch, who replaced previous Assistant Director Tricia McClung, who left the CFPB a few months ago, according to Samuel Gilford, a spokesman for the bureau.
Elizabeth Reilly, one of the first employees to join the CFPB upon its creation in 2010, will serve as chief financial officer, having been promoted from her previous position as deputy chief financial officer. Prior to her work with the CFPB, Reilly was a program examiner and acting branch chief at the Office of Management and Budget (OMB).
- Leandra English, who has held many CFPB titles, will become the bureau’s chief of staff. English previously served as the agency’s deputy chief operating officer, acting chief of staff, deputy chief of staff and deputy associate director of external affairs. Like Reilly, English is also an OMB alumnus, where she served as chief of staff and senior advisor to the deputy director of management.
- Jerry Horton, who previously worked for the Department of State, the U.S. Agency for International Development and the U.S. Mint, will serve as chief information officer. Before his government career, Horton worked in the private sector for more than 20 years, leading both business and technical functions for a wide variety of startups, two supercomputer manufacturers and several large corporations.
- Finally, Paul Kantwill, a 25-year Army veteran, will serve as the CFPB’s assistant director for servicemember affairs. Kantwill previously worked as the Department of Defense’s legal policy expert on the financial industry and the effects financial products and services had on military members and their families.
The hiring spree isn’t unusual, as the CFPB has a tendency to announce leadership changes at least once per year.
These new hires are often announced at the beginning of the year, but in October 2016, individuals were installed in the posts of assistant director for the Office for Older Americans; deputy general counsel for Litigation and Oversight; and deputy general counsel for General Law and Ethics.