Judge Rules in Favor of Trump Over Fate of Consumer Watchdog

WASHINGTON (CN) – A federal judge ruled in favor of the Trump administration Tuesday, allowing the president’s pick to lead the nation’s top financial watchdog agency to remain in place.

Leandra English, who was appointed to the post by outgoing Consumer Financial Protection Bureau director Richard Cordray last week, asked the court to block White House budget director Mick Mulvaney from serving as the interim director of the bureau after President Donald Trump appointed him to the post.

Citing conflicting laws, English and Mulvaney both claimed a legal right to be acting director and have been functioning in that capacity at the agency this week.

U.S. District Judge Timothy Kelly settled the issue late Tuesday afternoon, at least for now. In a ruling from the bench, Kelly – a Trump nominee – denied English’s motion for a temporary restraining order, finding she was unlikely to succeed on the merits of the case.

The White House welcomed the ruling in a statement.

“The administration applauds the court’s decision, which provides further support for the president’s rightful authority to designate Mulvaney as acting director of the CFPB.  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.”

Justice Department representative Lauren Ehrsam also applauded the ruling.

“We are pleased with the court’s decision to deny the request for a temporary restraining order, finding that the plaintiff had not shown a substantial likelihood of success on the merits,” Ehrsam wrote in an email.

Back in the courtroom, Deepak Gupta with Washington-based Gupta Wessler told Kelly he disagreed but thanked him for making the ruling quickly.

Gupta had asked the court to simultaneously rule on the temporary restraining order and a preliminary injunction so that English could immediately appeal the ruling to the D.C. Circuit, to which the government objected to.

Responding to the government’s objection, Kelly said: “I agree that this court is not merely a pit stop on the way to the D.C. Circuit.”

Prior to Kelly’s ruling, Gupta told the court that English fears she might be fired.

“We have reason to believe that might occur based on communications she received,” Gupta said during the afternoon hearing.

English received emails from Mulvaney that reprimanded her, and other agency employees have been instructed to report all communications with her, Gupta said.

Kelly did not address that in his ruling, but did thoroughly explain his reasoning.

English had argued the Dodd-Frank Wall Street Reform and Consumer Protection Act contains mandatory succession language stipulating that the deputy director “shall” fill the interim director slot pending Senate confirmation of the president’s chosen appointee.

Kelly, however, agreed with the government’s position that the Federal Vacancies Reform Act gives the president the authority to name an acting director, despite the language of the Dodd-Frank Act.

“On its face the [Federal] Vacancies Reform Act does appear to apply to the situation,” Kelly said, adding English failed to show the law was not applicable. The text of the Dodd-Frank Act does not exclude the Federal Vacancies Reform Act as an option for filling an empty directorship, Kelly said.

A temporary restraining order is ordinarily used to maintain the status quo while a legal issue is decided, but in this case Kelly found that granting it would have changed the status quo.

Because the general counsel of the Consumer Financial Protection Bureau acknowledged Mulvaney as the acting director, and the agency has been treating him as such, Kelly said ruling in favor of English would have altered, and not maintained, the status quo.

Kelly said he also considered the potential harm that ruling in favor of English would impose on Mulvaney by removing him from the acting director position, calling it “a sort of mirror.” Kelly also cited potential harm to Trump, who he said is entitled under the Federal Vacancies Reform Act to appoint an acting director to the agency.

Gupta did not immediately respond to a request for comment on the ruling.

 

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