Two people claiming to be director of a federal agency? Here's the courtroom drama to watch in Trump's first days

Richard Cordray could be at the center of a big legal battle with the incoming Trump administration.

There's a courtroom drama playing out that's likely to spark a Constitutional crisis during the first few days of the Trump Administration -- and could lead to two people simultaneously claiming to be the director of a major federal agency. You'll need a scorecard to follow along, so that's what I've done here.

The nation's youngest, and perhaps most high-profile, consumer agency was set up in the wake of the financial collapse, and it was designed to be different from other regulators. The Consumer Financial Protection Bureau was given a single, powerful director, unlike the Federal Trade Commission or the Federal Communications Commission. Architects of the agency believed that commissions lead to the committee effect, which muddies the waters and hamstrings effective, decisive, "cop-on-the-beat" action. The director was also given a 5-year term precisely so it wouldn't coincide with political elections. Critically, the director was designated as a non-political appointee who did not serve at the will of the president, but rather could only be removed "for cause."

Richard Cordray was named CFPB director in 2013, meant to serve until 2018.

But only weeks before the presidential election, a D.C. federal appeals court struck down the "for cause" element of the CFPB director job. That cleared the way for the as-yet-to-be-elected president to fire Cordray for any reason. The CFPB immediately appealed, throwing the ruling into legal limbo.

At the time, with Democratic candidate Hillary Clinton leading in the polls, this didn't seem like a big deal. Once Trump won, it became a very big deal -- and that's where the Constitutional crisis comes in. And here's where it gets technical. Sorry.

Appeals courts often hear cases as smaller panels. In this case, CFPB critics won their appeal 2-1. The CFPB appealed the appeal, asking that the full appeals court re-hear the case. The court agreed to essentially set aside - legally, to withhold its issuance of mandate -- until the court decides on the request for a full court re-hearing.

According to Deepak Gupta, a lawyer representing consumer organizations that have filed a friend-of-the-court brief in support of the CFPB, that means the old legal structure for the CFPB remains in effect. So Cordray cannot be fired on a whim by Trump; he must be fired for cause, which is rarely done.

There was a chance that the legal dispute could be settled by inauguration day, but it's clear that's not happening, Gupta said, as the court recently agreed to wait for a new response from CFPB critics before ruling on hearing the appeal again.

So, what does that mean?

"Nobody can tell you what's going to happen," Gupta said. "It would be normal to wait for the courts to settle this...but the Trump folks are not constrained by norms, as we've seen."

The Trump administration has signaled it will move to fire Cordray anyway. It said publicly that former Texas Republican Congressman Randy Neugebauer has been interviewed as a Cordray replacement, for example.

"A normal White House wouldn't do this, but it is a realistic possibility," Gupta said.

If that happens, the courtroom fireworks are sure to go off. Cordray could very well sue to keep the job -- an agency head, suing the presidency -- which would have little legal precedent.

Trump's administration could argue either that it's accepting and acting on the appeal court panel decision, and that is has the right to fire Cordray or any reason. Or it could argue that, regardless of the ruling, it has cause to fire Cordray.

"For cause" is a vague term that conjures up suggestions of outright criminality. Gupta said the legislation defines it as,"negligence, inefficiency (or) malfeasance." But he didn't think the meaning of the phrase had a real legal definition.

"Never in American history has this standard been litigated," he said.

Of course, the CFPB is a different kind of agency. When Cordray was appointed, he was the second choice -- the CFPB was the brainchild of Elizabeth Warren, now a Massachusetts senator. Republicans had indicated they would never confirm her, so President Obama went with Cordray, a soft-spoken attorney general from Ohio. Republicans blocked his confirmation also, so Obama ultimately broke with tradition and used a recess appointment to install Cordray, circumventing the confirmation process.

So, what happens if Trump and Cordray end up fighting this battle?

"There would be litigation in which Cordray asks a court to prevent the president from firing him because he doesn't have legal authority to do so. It would be quite a Constitutional battle," Gupta said. Like any government employee, Cordray should be entitled to due process before he is fired, Gupta said.

It could possibly be the most dramatic court fight of the new administration. Expect every consumer law organization in America to jump into the fray. Meanwhile, industry groups and opponents of the CFPB -- after five years of civil penalties and aggressive enforcement, the bureau has many enemies -- would line up for a chance to dump Cordray and defang the CFPB.

One way out would be for Trump to signal Cordray will be removed at some future date: far enough in the future that the legal battle would likely work itself out. That would undermine Cordray's power, and perhaps even undermine the bureau's legal standing to file lawsuits, while giving Cordray a chance to resign.

But it's also conceivable that, sometime soon, Neugebauer's staff will arrive at the CFPB and Cordray staff will refuse to give up their desks.

"That obviously would not be a tenable situation," Gupta said.

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