New York’s Department of Financial Services has hired Gabriel O’Malley, the Consumer Financial Protection Bureau’s former deputy enforcement director for policy and strategy, the state regulator said Thursday in a LinkedIn post.

O’Malley, who confirmed the news in his own post Friday, will serve as executive deputy superintendent of NYDFS’s consumer protection and financial enforcement division.

“DFS is continuously looking for top talent to join the Department as we advance our mission to empower consumers and protect them from financial harm,” NYDFS said in its post, emphasizing that it is hiring. 

Incidentally, NYDFS Superintendent Adrienne Harris said much the same at an event last week, when a Brookings Institution senior fellow remarked that the agency might “be seeing a lot of people come from Washington.”

“We welcome you,” Harris said at the time.

The move comes at a critical time for the CFPB, which has seen Trump administration appointees arguably attempt to shutter the agency through inaction. Within a day of being named the CFPB’s acting chief, Office of Management and Budget Director Russ Vought ordered bureau employees to stop all work, and also signaled an attempt to return money earmarked for the bureau to the Federal Reserve, which funds it. Federal courts are hearing cases as to the legality of both actions.

Meanwhile, some of the bureau’s top officials have chosen to leave rather than wait out the legal fight. The bureau’s supervision director, Lorelei Salas, and enforcement director, Eric Halperin, resigned on Vought’s second workday in charge of the bureau, after each was put on administrative leave.

Others have followed. David Bleicken, a 14-year CFPB veteran who last served as operations chief of the bureau’s supervision division, left last month, according to LinkedIn. Mark McArdle, who worked for more than seven years as the CFPB’s assistant director for mortgage markets, also left in February, according to LinkedIn.

"For me, the parts that have the magic — and where the CFPB can do the most good and change is lasting — is when you have consensus behind the decision … That makes change more resilient," McArdle told American Banker this month, noting recent instances when trade groups and others take matters to court in near-instant opposition to rulemaking or enforcement actions. "You don't get sued, and you don't have someone immediately overturn it the next time you lose an election."

It tracks that O’Malley would jump.

“Since [the CFPB’s] Enforcement staff were placed on administrative leave, the Division’s work life has been marked by silence and uncertainty,” he said in a March 1 LinkedIn post publicizing his departure. “Come what may, given their intelligence, grit, hard work, and drive to help those most in need, I have no doubt that each member of Enforcement will go on protecting folks throughout their career. I will be rooting hard for them – and for the Bureau.”

He also hinted at his NYDFS move, without naming names.

“Fortunately, I'll still be working to protect consumers in my next role. More on that later!” he wrote.

Stricter protections

Another familiar former CFPB face emerged last week in New York, signaling support for the state attorney general’s push to include unfair and abusive practices among the actions from which consumers would be protected.

“Businesses should compete by providing great products and superior service, not by devising schemes to rip people off,” former CFPB Director Rohit Chopra said in a press release Thursday announcing New York’s FAIR Business Practices Act. “We need stronger state laws to combat abuses that harm families and honest businesses.”

New York Attorney General Letitia James couched the legislation as a means to shield New Yorkers from deed theft, artificial intelligence-based schemes, hard-to-cancel subscriptions, data breaches and junk fees. But it stands as a notable move by a state to pick up slack that may be left while the federal consumer-protection regulator is largely nonfunctional.

“New Yorkers are especially vulnerable in this moment as our strongest line of defense – the Consumer Financial Protection Bureau and Federal Trade Commission – are being eroded, and there are no state-level protections in New York against unfair and abusive market conduct,” Carolyn Carter, deputy director of the National Consumer Law Center, said in Thursday’s press release.

New York’s current consumer protection law, passed in 1970, prohibits deceptive business acts and practices, but fails to include unfair or abusive acts under its umbrella, proponents of Thursday’s bill argue. Meanwhile, upwards of 40 states protect against unfair and abusive acts, they said.

Reinstated

The CFPB reinstated all probationary and most term employees it had fired last month, according to a letter seen Sunday by Bloomberg Law. 

Term employees who worked for the CFPB for two years or more were not reinstated, sources told the outlet.

Reinstated employees will receive back pay from the time they were fired, and their terminations will be removed from employment records, the CFPB’s chief operating officer, Adam Martinez, wrote in the letter.

Most of the employees will remain on administrative leave until their managers instruct them to return to work, Martinez said.

The move comes after a federal judge Thursday ordered the CFPB and 18 other agencies to temporarily rehire probationary employees they fired.