Siding with Trump, judge rules Mick Mulvaney to remain interim CFPB head

Show Caption Hide Caption Judge Rules in favor of Mulvaney, Trump in CFPB leadership debacle Trump appointed Mick Mulvaney to lead the agency shortly after the outgoing director appointed his own successor. Video provided by Newsy

WASHINGTON – A federal judge on Tuesday refused to block the appointment of Mick Mulvaney as interim director of the Consumer Financial Protection Bureau, siding with the Trump administration in the legal fight over the leadership of the consumer watchdog.

"Denying the president's authority to appoint Mr. Mulvaney raises significant constitutional questions," U.S. District Judge Timothy Kelly said.

"Nothing in the statutes prevents Mr. Mulvaney from holding both of these positions," the judge said, referring to Mulvaney's existing job as the federal budget director.

Kelly, a Trump appointee, rejected the argument in a lawsuit from Leandra English that she should be the interim leader of the consumer bureau that oversees banks, mortgage providers, credit card issuers and other financial services that affect millions of Americans.

Richard Cordray, who resigned as the consumer bureau's director on Friday, elevated English from her job as the watchdog's chief of staff to deputy director in an 11th-hour appointment as he departed. Cordray said a provision of the Dodd-Frank Wall Street reform act that created the watchdog after the financial crisis would automatically make her his successor.

President Trump, however, named Mulvaney as the watchdog's acting director hours later, citing authority from a different federal law called the Vacancies Reform Act. The move set off two days of confusion as both English and Mulvaney claimed to be the bureau's acting director.

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After a lawsuit from English to block Mulvaney from taking over, Kelly ruled that the provisions of the law cited by Trump and Department of Justice attorneys serve as the prevailing authority in support of the president's "lawful" appointment.

Deepak Gupta, English's attorney, acknowledged the court "loss" in a brief statement following the decision. However, he vowed that the ruling would "not be the final answer." He signaled that the case would move forward with a possible request for a preliminary injunction against Trump's appointment.

A court denial at that stage would trigger a likely appeal.

At one point during Tuesday's court session, Gupta raised the possibility that English could face punitive action from Mulvaney for challenging his leadership of the agency.

Kelly, however, said no direct evidence of such retaliation had been presented to the court.

The Trump administration quickly declared victory over the judge's decision.

"The administration applauds the Court’s decision, which provides further support for the President’s rightful authority to designate Director Mulvaney as Acting Director of the CFPB," the White House said in a statement.

"It’s time for the Democrats to stop enabling this brazen political stunt by a rogue employee and allow Acting Director Mulvaney to continue the Bureau’s smooth transition into an agency that truly serves to help consumers.”

The Consumer Bankers Association, one of several financial services providers that have criticized the consumer bureau's actions, similarly welcomed the ruling.

"We look forward to working with Acting CFPB Director Mick Mulvaney to bring transparent and balanced consumer protections to all customers and small businesses," CBA President and CEO Richard Hunt said in a statement.

The unusual battle for control of the consumer bureau started on Friday as Cordray ended his six-year tenure with the controversial leadership succession plan. On Monday, both English and Mulvaney showed up for work and claimed the mantle as acting director.

The dueling acting directors left the watchdog's leadership and immediate future in doubt.

Mulvaney issued a directive this week instructing staffers to consider him the acting director. Separately, English sent the employees an email about the succession changes and met with congressional Democrats who supported her claim to the watchdog's top job.

From the White House's perspective, Mulvaney's installation was meant to serve as an immediate break with the Obama-era leadership, pending the nomination and approval of a permanent director.

During a Monday news conference, Mulvaney said that the consumer bureau's operations under Trump would be "dramatically different" than under Obama.

Referring to Trump's view of the watchdog's mission, Mulvaney said: "He wants me to get it back to the point where it can protect people without trampling on capitalism, without choking off the access to financial services that are so critical to so many folks."

Gupta argued, unsuccessfully, that allowing Mulvaney, a top White House official, to hold the post would compromise the bureau's independence.

However, Mulvaney insisted he would "be as independent from Donald Trump in this role" as Cordray had been from Obama.

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