Consumer Financial Protection Bureau battle with Trump administration heads to court
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The deputy director of the Consumer Financial Protection Bureau filed a lawsuit to stop President Trump from choosing someone else to fill the role.
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The battle over leadership of a consumer watchdog created during the Obama administration headed toward a federal court showdown Monday.
Leandra English, appointed as deputy director of the Consumer Financial Protection Bureau last week in an 11th-hour move by Richard Cordray, the bureau’s departing chief, filed a lawsuit late Sunday seeking to block President Trump from naming his own pick to head the agency on an interim basis.
English argued that she officially became acting director of the consumer bureau following Cordray’s departure pursuant to the Dodd-Frank Act, the sweeping Wall Street reform law that created the watchdog after the financial crisis.
Her lawsuit is aimed at blocking Trump’s Friday night appointment of Mick Mulvaney, the federal budget director, to serve as the consumer bureau’s acting director until a new appointee is named and confirmed by the Senate.
Both English and Mulvaney showed up for work at the bureau’s Washington, D.C. headquarters on Monday.
 The unusual court fight, featuring one part of the federal government suing another, deepened the uncertainty surrounding the future of the consumer watchdog. The regulator has been criticized by both the financial services industry it oversees and congressional Republicans, even as it has drawn consistent praise from consumer advocates.Â
A nine-page legal memorandum filed on behalf of English argued that the Dodd-Frank Act mandates that the consumer bureau’s deputy director “shall … serve as the acting director in the absence or unavailability of the director.”
That provision means English “serves in that capacity until such time as the President appoints and the Senate confirms a new director,” the legal memo argued.
English asked the U.S. District Court for the District of Columbia to issue a temporary restraining order barring Trump from naming an acting director of the consumer bureau and prohibiting Mulvaney from filling that role.
However, the White House on Monday released a legal advisory in which Mary McLeod, the consumer bureau’s general counsel since 2016 under Cordray’s tenure, concluded that Trump has the legal authority to appoint Mulvaney to head the watchdog on an acting basis.
Statutory language, legislative history, precedent from the Department of Justice’s Office of Legal Counsel, and case law “all point to the conclusion that the President may use the Vacancies Reform Act” to appoint Mulvaney, wrote McLeod.
“I advise all Bureau personnel to act consistently with the understanding that Directory Mulvaney is the Acting Director of the CFPB,” the advisory concluded.
John Czwartacki, Mulvaney’s communications director at the federal budget office, tweeted an early Monday morning photo that showed his boss already at work in the consumer bureau’s Washington, D.C. headquarters.
It was uncertain how soon the federal court would act on the lawsuit, and how the consumer bureau would function in the meantime.
By Monday afternoon, Matthew Berns, a Department of Justice attorney, had filed an official court appearance as government lawyer representing Trump and Mulvaney.
Cordray, the Obama appointee who served as the bureau’s first director, launched the battle Friday by formalizing his previously announced plan to resign. In a letter to Trump, he highlighted the bureau’s record of returning nearly $12 billion to consumers “cheated or mistreated by banks or other large financial companies.”
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Richard Cordray, director of the Consumer Financial Protection Bureau, talks about mortgage protections, managing student loans and the best ways to prevent another financial crisis with USA TODAY Editorial Page writer Saundra Torry.
While Cordray’s letter said his resignation would take effect at midnight Friday, it said nothing about a succession plan.
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However, in a separate email to staffers at the consumer bureau, Cordray announced he reassigned English, the agency’s chief of staff, as deputy director.
The elevation of English “would minimize operational disruption and provide for a smooth transition given her operational expertise,” Cordray wrote.
Hours later, Trump announced that Mulvaney would instead head the consumer bureau temporarily.
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The Chamber of Commerce, the largest lobbying group in Washington by far, has filed a lawsuit against the Consumer Financial Protection Bureau to stop customers from filing class action lawsuits. Jose Sepulveda (@josesepulvedatv) has more.
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“The President looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities,” the White House announcement said.
Alan Kaplinsky, leader of the Ballard Spahr LLP law firm’s consumer financial services group, on Saturday tweeted that Trump should prevail in the legal fight because the Dodd-Frank succession process cited by English did not refer to the resignation of the consumer bureau’s director.Â
“Absence or unavailability connotes a temporary status and, in my opinion, does not cover a resignation,” tweeted Kaplinsky, who added that he thinks Trump “should win.” He also predicted that the consumer bureau’s daily operations would bog down during the court fight.
I doubt it will be business as usual. Indeed, I think that things will come to a screeching halt at the CFPB until the courts decide who is entitled to be the acting director.
— Alan Kaplinsky (@AlanKaplinsky) November 25, 2017
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Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc