Trump Choice to Head Consumer Watchdog Is Backed by Judge

President Donald Trump won a legal fight over who gets to run the Consumer Financial Protection Bureau -- at least for now.

His budget director Mick Mulvaney can remain as temporary head of the agency, a federal judge ruled in rejecting a request to block the move from Leandra English, who was named to the role by the departing director. U.S. District Judge Timothy Kelly in Washington rebuffed English, who sued to Nov. 26, contending she is entitled to the provisional post. 

That outcome cast a shadow over her contention the 2010 Dodd-Frank Wall Street reform legislation controls the line of temporary succession at the agency and not the broader federal statute relied upon by the president to designate Mulvaney.

Richard Cordray stepped down on Nov. 24, more than eight months before his term was scheduled to expire, designating English as his provisional successor. The president responded by naming Mulvaney, citing his power to do so under a different statute.

Whoever ultimately prevails in the court fight will gain the power to guide the the bureau while the process of selecting and confirming a permanent director plays out. Under Cordray, the agency drew fire for its aggressiveness, even as it laid claim to providing almost $12 billion in relief to consumers. Among those critics was Mulvaney, a former Republican Congressman from South Carolina who called the agency a "sad, sick joke."

The Trump administration welcomed the judge’s ruling.

“The administration applauds the court’s decision, which provides further support for the president’s rightful authority to designate director Mulvaney as acting director," White House Deputy Press Secretary Raj Shah said in a statement.

Judge Rules

Kelly, who has been on the bench since only September, is a Trump nominee who previously worked for Senate Judiciary Committee Chairman Chuck Grassley, an Iowa Republican, and also served as a federal prosecutor.

The judge’s ruling came after hearing from both sides Tuesday. A day earlier, attorneys for English and the Justice Department had spent about 40 minutes trying to persuade him.

Joining the fight on English’s behalf were about two dozen current and former members of Congress who told Kelly the president’s choice of his White House budget director to temporarily helm the CFPB threatened the agency’s ability to operate independently as designed.

Among those who joined in that filing, former U.S. Representative Barney Frank, a Massachusetts Democrat who co-authored the Dodd-Frank legislation with former Connecticut Senator Christopher Dodd.

CFPB Political Circus Hits Day Two With More Memos, Protests

The CFBP leadership fight comes as a U.S. appeals court in Washington has before a it a case where the fate of the agency is at stake. A New Jersey mortgage company sued the bureau two years ago after being hit with $109 million in penalties. Attorneys for PHH Corp. claimed the CFPB and Cordray wielded so much unchecked power it actually violated the U.S. Constitution.

While a three-judge panel agreed the bureau was unconstitutionally structured, it stopped short of ordering its dismantling. Instead it made Cordray fireable for any reason, whereas he could previously only be dismissed for cause. The CFPB won the right to reargue the case before an 11-judge panel and did so in May. The court hasn’t issued a ruling.

Mulvaney arrived at the bureau Monday bearing doughnuts for staffers and a message that they should disregard any instructions received from English. She sent a message, telling its employees she was honored to be working with them and identified herself as acting director.

Her claim of authority isn’t only disputed by the administration, but also by CFPB General Counsel Mary McLeod who, on Nov. 25, issued her own analysis of the relevant laws and concluded Trump has the power to name an acting director.

The case is English v. Trump, 17-cv-2534, U.S. District Court, District of Columbia (Washington).