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Lawsuit Challenges Trump's Pick to Lead Consumer Watchdog Agency; Conyers Steps Down from Post, Franken Apologizes. Aired 7- 7:30a ET

Aired November 27, 2017 - 07:00   ET



ALISYN CAMEROTA, CNN ANCHOR: An Obama era official suing President Trump to block him from appointing Mick Mulvaney to run the nation's top consumer watchdog agency.

[07:00:22] UNIDENTIFIED MALE: It's an agency that needs to be reformed.

UNIDENTIFIED MALE: He hates it like the devil hates holy water, and they're trying to put an end to it.

CHRIS CUOMO, CNN ANCHOR: A busy week on Capitol Hill set to begin, as Congressman Conyers steps down from a key leadership position.

SEN. AL FRANKEN (D), MINNESOTA: I'm taking responsibility, and I apologize.

UNIDENTIFIED MALE: The president digging in his heels in his support of Roy Moore.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: If you think winning with Roy Moore is going to be easy for the Republican Party, you're mistaken.

UNIDENTIFIED FEMALE: Prince Harry has announced his wedding engagement to American actress Meghan Markle.

MAX FOSTER, CNN CORRESPONDENT: Most people very excited that she's going to bring this fresh spark, if you like, into the royal family.


ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

CUOMO: Good morning. Welcome to your NEW DAY. The Trump administration facing another legal challenge. This time the issue is who gets to decide the temporary leadership of the nation's top consumer watch dog agency. An Obama-era official who was set to take over is now suing President Trump over his pick of budget director Mick Mulvaney, who is a long-time critic of the agency.

CAMEROTA: In other news, sexual harassment scandals casting a cloud over Capitol Hill. Senator Al Franken apologizing again for his behavior.

And Congressman John Conyers giving up his top post on the Judiciary Committee while he undergoes an ethics probe for harassment claims.

All of this as the president and Republicans face a daunting to-do list when they get back to work today.

We have it all covered. Let's begin with CNN's Jessica Schneider. She's live in Washington outside of the scene of what could become a showdown in an hour at the Consumer Financial Protection Bureau.

What's happening, Jessica?

JESSICA SCHNEIDER, CNN CORRESPONDENT: Well, you got it right, Alisyn. The big question who will be in charge when the bureau opens for business just a little bit later today? All indications are that this could be a potential showdown.

A source tells CNN that Mick Mulvaney, the president's pick, will be showing up here ready to work a little bit later this morning. But in a lawsuit filed late last night, the former chief of staff who was named as acting director by the outgoing director, she says that Mulvaney is trying to take her rightful spot.


SCHNEIDER (voice-over): President Trump now facing a legal battle over who will head the Consumer Financial Protection Bureau. Leandra English is suing to stop the president from installing his budget director as head of the watch dog agency, declaring the appointment of Mick Mulvaney, quote, "unlawful" and calling herself the, quote, "rightful director." The lawsuit is seeking legal clarity on succession protocol within the agency.

A source close to Mulvaney tells CNN that he will show up for work today at the agency, expecting a normal transition, rather than a showdown for power.

President Trump's decision also controversial because Mulvaney has been a harsh critic, which was created after the global economic crisis in 2008. It's designed to protect consumers from predatory financial institutions.

MICK MULVANEY, TRUMP APPOINTEE, CONSUMER FINANCIAL PROTECTION BUREAU: It's a wonderful example of how a bureaucracy will function if it has no accountability to anybody. It turns up being a joke. And that's what the CFPB really has been in a sick, sad kind of way.

SCHNEIDER: Mulvaney also voted to end the bureau, working with the president to roll back some of the agency's power, even slamming the agency before the Senate Budget Committee back in January.

MULVANEY: Because they're run by essentially a one-person dictator who believes he can't even be fired by the president but for cause. We have created, perhaps inadvertently, the very worst kind of government entity. SCHNEIDER: The tug of war over leadership began Friday when Richard

Cordray resigned as the agency's director, naming his chief of staff, Leandra English, as his successor. Just a few hours later, President Trump stepped in, instead naming Mulvaney as acting director.

Senator Elizabeth Warren, one of the architects of the agency, is asserting the president is overstepping his authority, arguing English is entitled to the position under the Dodd-Frank Wall Street reform law, which states the deputy director becomes acting director when the agency's top spot becomes vacant. But the White House citing a different law, the Federal Vacancies Reform Act, which allows the president to temporarily appoint an acting head to an agency already confirmed by the Senate.

Republicans are applauding Mulvaney's appointment.

GRAHAM: I think the president is on good ground here to appoint somebody under the Vacancy Statute. In terms of the agency, it's the most out-of-control, unaccountable federal agency in Washington.

SCHNEIDER: While Democrats are slamming it as a political move.

UNIDENTIFIED MALE: Wall Street hates it like the devil hates holy water. And they're trying to put an end to it.


[07:05:02] SCHNEIDER: But this morning the top lawyer here at the bureau, she is siding with the Trump administration. The general counsel, Mary McLeod, she has written a memorandum saying that it is completely within the president's right to name as his acting director Mick Mulvaney.

And of course, the White House is applauding that memo and also taking a dig at the outgoing director. In the meantime, the White House saying this: "It is unfortunate that Mr. Cordray decided to put his political ambition above the interests of consumers with this stunt. Director Mulvaney will bring a more serious and professional approach to running the CFPB."

But of course, Chris, the question remains: what happens when both of them show up here at the bureau this morning? Who exactly will take the helm -- Chris?

CUOMO: Who gets the parking space, Jessica? Who gets the parking space?

All right. Sexual harassment scandals are going on on both sides of the aisle. And that is gripping Washington. It matters. They better find a way to make the system better there. But they also have to also figure out how to do the rest of their job. The president and Republicans are facing a critical week in their legislative agenda.

CNN's Suzanne Malveaux has that story for us live on Capitol Hill -- Suzanne. SUZANNE MALVEAUX, CNN CORRESPONDENT: Good morning, Chris. It

certainly is critical. We're going to see the president back on Capitol Hill this week, starting tomorrow, meeting with Senate Republicans to try to directly push forward for tax reform legislation. This is something that he has promised to get by Christmas holiday break. We will see if that happens. But a lot of Republicans certainly hoping that they can at least put some win on the board before the end of the year.

Now, this comes at the same time where much of the focus, some people calling it a distraction but others saying very important focus, on misconduct and allegations of sexual harassment.

Senator Al Franken, the Democrat from Minnesota, being alleged to -- of sexual misconduct before in the Senate as well as during the Senate. He apologizing over the weekend, saying for the first time that he is shocked by this. He is embarrassed. He says he is, however, not going to leave the Senate, that he is going to try to regain the trust of those who put him in office. Take a listen.


SEN. AL FRANKEN (D), MINNESOTA: I am taking responsibility. I've apologized to women who have felt disrespected and to everyone I've let down. I'm cooperating fully with the Ethics Committee, and I am trying to handle this in a way and -- to -- that adds to an important conversation and to be a better public servant and a better man.


MALVEAUX: Senator Franken says he looks forward to coming back to work. That would be today as they gavel formally at 4 p.m. on the Senate side. On the House side, you have problems with Congressman John Conyers, 88-year-old. He was also alleged for settling a sexual harassment suit. And he has stepped down from the House Judiciary Committee as ranking member.

But he also says that he is not guilty of any of these allegations, that he is looking forward to meeting with the House Ethics Committee and vindicating his name, as well as his family's -- Chris and Alisyn.

CUOMO: All right, Suzanne. Appreciate it.

Joining us now are CNN political analysts John Avlon and David Gregory.

All right. Let's start with what's happening when they pull up today. The obvious question is who wins the parking spot? You've got a legal battle, but then you've really got to have a much larger political battle here about what we're going to do for consumers and how we're going to treat the big banks.

David Gregory, how do you see it?

DAVID GREGORY, CNN POLITICAL ANALYST: Well, there's a legal showdown that will have to be resolved. But as we've been saying this morning, you are going to have a showdown. The president wanted it that way. And obviously, the agency wanted it that way, too. They're each relying on the statute, in one case on the part of the agency, but the general counsel for the agency is saying that the administration is right to rely on, you know, the vacant clause for federal agencies that they can rely on.

The bottom line is, this is a -- such a polarized agency. Has been from the start. You had a financial collapse that gave birth to this agency in the first place that was about a failure of regulation on the part of the federal government and a financial system that was much smarter and faster than federal regulators anyway.

The candidate who said he was going to stand up for the little guy, but in the end has sided very heavily with those making the case that the previous administration, the Obama administration, cracked down too harshly and -- and put in place regulations that hurt businesses rather than help them. And that's where we are today. That's the fight that the president wants.

CAMEROTA: What about that, John? I mean, for people who aren't familiar with what the work of the Consumer Financial Protection Bureau, and you heard Lindsey Graham there, a senator, say this is unchecked power that they have. So is this important to consumers? I mean, this showdown that's happening, will it change people's lives today?

[07:10:06] JOHN AVLON, CNN POLITICAL ANALYST: This is a significant showdown just from a question of executive power. We'll see what a judge ultimately decides, but right now you've got two people who believe they should rightfully be running the agency from opposite ends of the ideological spectrum.

You know, Laura [SIC] English has come up -- Leandra English has come up from within the organization. And Mick Mulvaney has voted to abolish the agency. And this is part of a pattern we've seen, of the Trump administration sometimes appointing folks to run agencies they've said should not exist.

Look, this organization came about in the wake of the financial crisis as one of the few concrete entities designed to help the little guy. And I do think that's a point we're focusing on, that President Trump really campaigned on defending the little guy, that populist streak, against Wall Street.

But that rhetoric hasn't been followed through action. In fact, just the opposite. So not only is this a polarizing agency along really political lines; it does create questions about who's going to be looking out for consumers. Because 29 million Americans have found relief through this agency to date. And the problems with big banks and other folks haven't totally subsided at all.

So you've got politics. You've got power. You've got ideology. And at the bottom, without anybody really looking out for him sufficiently, for the consumers who have gotten caught in the crossfire over and over again as these larger... CUOMO: Just to answer Alisyn's question, this was part of the Dodd-

Frank legislation. It was supposed to be a bundle-protected agency. Credit cards, student loans, bank loans all in one place with one ability to oversee it. And at the time -- you know, I was surprised to hear Senator Graham. You've got to go back and see where he was when they were all trying to find a way out of what happened in 2008, when they were all trying to say that they weren't part of the problem of allowing this crazy prospecting that was going on on Wall Street.

And for him to now say, David Gregory, "Oh, this is the least accountable," well, what else did they put in place? Nobody ever went to jail for what those banks did and, in some ways, continue to do. Do you think they've forgotten the lesson of 2008?

GREGORY: Well, I think that, first of all, the battle cry about nobody went to jail. I mean, there were prosecutors in the Justice Department that looked at this. This has become, you know, argument.

I mean, that's the problem with this, is just to your point, people forget how both frightening this was because of so many people being hurt and what it meant to a financial collapse in the country, but the answers for how you seek to regulate an industry that both outsmarts and outpaces what government is able to do is what fed a lot of opposition to Dodd-Frank generally, and the compliance concerns that the major banks had with it, as well as this bureau, which then gets into, you know, the ideological fight in Washington about what government should do and what it shouldn't do.

But to answer your question, yes, I don't think Lindsey Graham should -- or anyone should be flip about taking accountability for what government failed to do to protect people from a credit bubble. And they ought to address an agency that doesn't have enough support in Washington and get it to a place that both the public can rely on it and that politicians who are Democrats and Republicans will sign up and say, "Yes, we believe in this agency again." And that's going to require some real work.

AVLON: And politicians who often pay lip service to the purpose of the agency. And there's a fundamental difference between trying to undercut -- undercut regulations that have hauled back business and then undercut regulations that are designed to help consumers.

There's another pattern here, as well, too, which is this is a major week for the Trump administration in trying to get tax reform done. And instead, its OMFB director, instead of actively lobbying for that, it's going to be focused on this political fight showing up to work. That's also part of a pattern of the Trump administration. You can't say this is the wisest use of Mulvaney's time given how central tax reform is to what this administration and this Congress hope to accomplish.

CUOMO: He doesn't have a lot of -- look, he doesn't have a lot of fiscal assets, too, in terms of people you can put in different places. You make a fair point. Let's give it to...

GREGORY: Can I ask one quick question, Chris, which is what happens if he just waited? When does the term expire? Couldn't he put his own person in there in another year?

CUOMO: Yes. But it's time. He wants it now.

GREGORY: ... that amount of time

CUOMO: And the litigation may take that long. So we'll see, but that's a good question.

All right. So now you have something else that's burdening them from talking about taxes, which is what's going on with these sex scandals. Al Franken is probably the sharpest focus right now, rightly or wrongly. And the question is, well, what do they want to do about it? You know? These settlements that they have, John, about paying these off.

Now, they have legitimate reasons to have legal settlements, so don't get me wrong. It's not like they should never settle anything. But this -- I don't know what it is, who makes these settlements? Where did this come from?

You know, this collective cuckoo (ph) that's coming out from Congress here, that they didn't know about it, that's an obstacle to change.

[07:15:00] AVLON: That is a huge thing for us to be focusing on, because it's fundamental. Who did -- who knew about these settlements? When did they know about it? When was the legislation written? Because this is unaccountable. It is not transparent, by design. And there's a lot more questions to be answered by members of Congress, including the leadership, as well as Congressman Conyers and others, who may have benefitted from this untransparent, unaccountable process that used taxpayer money to settle cases of sexual harassment.

CAMEROTA: OK. On that note, we're out of time. David Gregory, John Avlon, thank you both very much.

So a quick programming note. Join us tomorrow night for CNN debate on tax reform. Jake Tapper and Dana Bash moderated debate with Senators Bernie Sanders, Ted Cruz, Tim Scott, and Maria Cantwell, at 9 p.m. Eastern only on CNN.

CUOMO: He helped establish the federal consumer watch dog agency. So what does former Congressman Barney Frank think of the leadership showdown? Whom he thinks should be in charge, next.


CUOMO: All right. There's a big legal challenge going on in Washington. A lawsuit filed by the deputy director of the Consumer Finance Protection Bureau. Here's what it's about. Who should lead the agency?

[07:20:08] The outgoing head said she should as the director. And that's what the statute that establishes the agency says. But the president says, "I have the power to decide who runs agencies, and I want budget director Mick Mulvaney in charge." So now you have two people showing up to work this morning and think they're No. 1. Here's a taste of what Mulvaney said when he was a member of Congress about this agency.


MULVANEY: It has been a truly adversarial relationship, the CFPB, by virtue of the fact that they don't need Congress to exist, doesn't take very seriously Congress's oversight roles.

This place is just -- it's a wonderful example of how a bureaucracy will function if it has no accountability to anybody. It turns up being a joke. And that's what the CFPB really has been in a sick, sad kind of way.


CUOMO: So look, there is a legitimate legal issue that is going to have to get fleshed out. But that's the real issue that you just heard there Mick Mulvaney speaking to.

Do you want this kind of protection or do you not? It seems that the Trump administration has made the decision that it should not exist. That's why they want Mick Mulvaney there.

Let's discuss. We have former Democratic Congressman Barney Frank of Massachusetts. He's the co-author of the 2010 financial reform law that created the CFPB.

It's good to see you, sir.


CUOMO: All right. So let's quickly just touch on the law here. Who do you think should run the agency?

FRANK: Clearly, the deputy director. And one, what seems to be clear point, is this. When we wrote the law creating the CFPB and we deliberately tried to give it some protection from the normal political process -- Mulvaney is right about that -- we knew what the Vacancy Law said. In other words, the Vacancy Law was already on the books, the one Trump is claiming. We, knowing that was on the book, wrote a different law later. Ordinarily, the later law that was specifically tailored to the particular situation, covers it.

CUOMO: Is that reflected in legislative record? Because by the way, this is a statement against interests. I was arguing that this is just a definitional thing and a statue. It wasn't really supposed to deal with the situation of ascendants. But you're saying I'm wrong, that you did it specifically to give some insulation to the agency.

FRANK: Yes. Now, Mulvaney is right that there's a different agency. He's wrong, by the way, to single out just the consumer group.

Every bank-regulating agency has some autonomy. Regulating banks is sensitive politically. You want to keep political interference to a minimum. So the control of the currency and the federal deposit insurance corporation, they are also run by people who have terms and overlap the president and aren't subject to appropriation. In this case, because we knew that fighting the large financial

interests on behalf of consumers, which is going to put you in the battlefield every day. So we did do, deliberately, special protections. And here's the key point here. We gave the director of this agency a five-year term, removable by the president only for cause.

So the reason we added this piece is this: If you want to have a five- year term, you want to say, "Well, what happens to the guy gets hit by a car? You don't want that autonomy to end."

So the purpose of this effort was so that the five-year term would continue for five years, even if there was some problem with the head of the agency physically or in any other way.

CUOMO: So let's suss it out legally. That's a legal issue. Here's a bigger concern going on here, which is do we want this kind of protection or not? Mick Mulvaney is a known critic of the agency. I think it's a legitimate question whether or not he thinks it should even exist.

You have a very simple rebuttal to all of the Republican consternation about how bad the CFPB is. And it's what?

FRANK: It's simply this. You played a representative clip from Mulvaney talking about how it's out of control, et cetera. In all of the years since we -- it's created, it's been in existence more than five years now, they do not give you one single example of abuse.

They talk about an agency that is out of control; it's a bureaucratic monster. You would think there would be some horror stories. You would think they would say, "And here's what they did that was wrong. They cause this problem." You will not find -- and I hope people will ask me, critics, what is an example of what they did wrong?

They have gotten people money back when they were overcharged on their credit cards. They have gotten -- taken from people who were being abused by student loan collectors who the loan wasn't really due. They have gone after Wells Fargo.

CUOMO: The criticism is this, though. You know this. I'll tee it up for you, and you can give your counter argument. They don't listen to anybody. And they put handcuffs on the industry, and they make lending more expensive as a result, because the banks have to price in the -- the -- they have to price in the potential consequence that they're going to get attacked by the CFPB for their lending standards. So it's more expensive for everyone.

FRANK: And that's a fair point. But I would respond the way I just did. If there were examples of the CFPB unfairly going after banks, then the banks would have to put up some extra money to protect against that damage.

[07:25:12] But if you look at the record of the CFPB, I think it is very relevant. There's not a single criticism of a single action they have taken that says they went too far. And the reason, by the way, I want to give examples is they would then have to defend overcharging on credit cards or abusive student loan collections, et cetera.

So the answer is in the first place that the way you avoid CFPB charges, that you don't do what Wells Fargo did. Those are the things banks should be doing anyway.

Secondly, it's pretty hard to argue at the same time as the Trump administration does that the stock market is, as it is, at all-time highs, that the economy is doing wonderfully, that the financial industry stocks have done very, very well. But this agency is crippling them.

CUOMO: Right. Well, but, look, that's the bigger concern. I don't know if you'll remember but I remember like it was five minutes ago. The last time we had this discussion about why we had the problem in 2008, and what Congress should do about it, you wound up being very angry with me. Which is not unusual for you, Barney. You're a very passionate guy.

But it was about, well, what are you congressman doing about this? You are the guys who regulate that industry. You're in charge of all of these. You were in charge of the big banking committee then.

And now we see that it's starting to erode, the fear that we had out of 2008 that you've got to watch what the banks do. You have to protect the little guy. The president seems to be saying differently now. He said during the campaign, "I'm no friend of Wall Street. I'll go after him."

But now they seem to be doing exactly that, to remove the shackles, remove the restraints under the name regulation.

FRANK: First of all, I knew I would have this argument, and I'll tell you my argument was, in part, it's not popular today, but party has a lot to do with it.

The fact is that the Republicans were in control of the Congress from 1995 through 2006. We got unfairly blamed. Dick Cheney in his memoir said, "In 2003, we tried to reform this, and chairman Barney Frank of the Financial Service Committee blocked me." Except I wasn't chairman in 2003, or '04, or '05, or '06. I didn't become chairman until 2007.

When we took over in 2007, in those first two years, we did do all of these reforms as soon as we had the power. And the problem now is, with President Obama out of office, yes, the Trump administration is in the process of trying to weaken it.

And here's the frustration. I'm going to raise it. It's a very valid concern. It's interesting why is he doing this in this unusual way? He's sending the budget director to run it. By the way, doesn't it occur to people that the budget director has a couple other things he ought to be worrying about.

CUOMO: This is a big week for the Senate. He's supposed to be selling that bill.

FRANK: And the CR. You've got to fund the whole... CUOMO: Continuing resolutions so there's no shutdown.

FRANK: Doesn't shut down the government. So you listen -- you couldn't run on your lunch hour even if you were in favor of it.

But the point is this. They would very much like to weaken the law, but they would need enough votes to beat a filibuster. This is too popular. So the Senate Republicans aren't trying to undermine the law by the legislative process, because they know that it would be unpopular. They're telling them, "Hey, don't make me go out and vote in favor of Wells Fargo against people who are protected." So that's why they are going through it at the administrative way.

So it is part of their effort. You're exactly right. Nothing could be more contradictory to Donald Trump being the friend of the little guy than trying to undermine the most effective agency for the consumer in the financial area we've ever had.

CUOMO: Barney Frank, always a pleasure.

FRANK: I'm not mad.

CUOMO: Not now.

FRANK: No, maybe later.

CUOMO: You called me the worst. And you know what? My father agreed with you. He was like, "You were. You were very unfair to Barney."

FRANK: Your father would be great -- he was funny, too. I once said in an interview that I loved your father, which I did. He was my ideal politician. But he was -- I thought he kvetched a little bit too much sometimes. He sent me a great letter back. He said, "I promise to stop kvetching, because I don't want to keep you occupied." (ph)

CUOMO: Good. Good for him. Good to have you here. Alisyn.

CAMEROTA: OK, Chris, thank you.

Michael Flynn's legal team is reportedly no longer sharing information with President Trump's legal team. Does that mean Flynn is making a deal with Robert Mueller? We discuss the signs next.