The battle for the Consumer Financial Protection Bureau’s (CFPB) top spot is dragging on, thanks to the Trump-appointed judge who’s been assigned to oversee the case.
On Monday, U.S. District Judge Timothy Kelly decided to hold off on issuing a decision in a lawsuit brought by CFPB deputy director Leandra English, who was appointed acting director by outgoing CFPB chief Richard Cordray on Friday. The lawsuit asserts that President Trump — who appointed Office of Management and Budget (OMB) head Mick Mulvaney as interim CFPB director the same day that Cordray appointed English — had no standing to do so under the 2010 Dodd-Frank rule that created CFPB. The White House argues that the president has the authority to choose his own acting director under a Federal Vacancies rule, which English’s lawyers have disputed.
According to the Washington Post, Kelly stated on Monday night that the court should “wait until government attorneys supplemented their arguments in a 40-minute hearing by filing a formal, written response Monday night defending Trump’s choice.” Kelly added that he would detail “where we go from there” on Tuesday.
Kelly, who was confirmed to the bench in September, is a Trump nominee who served as chief counsel for national security and senior crime counsel for Sen. Chuck Grassley (R-IA). He previously worked for the Public Integrity Section at the Department of Justice, where he prosecuted public corruption cases.
During Kelly’s confirmation, Grassley told his colleagues on the Senate floor that Kelly was “a very talented attorney” who was “well-liked by staff and members on both sides of the aisle.”
“His collegiality and ability to get along with folks will serve him well on the bench,” Grassley said.
So far, Trump’s decision to nominate Kelly seems to be working out in his favor.
During Monday’s White House press briefing — despite having no official decision from Judge Kelly on the matter — press secretary Sarah Huckabee Sanders stated that Mulvaney had “taken charge of [the CFPB]” and had the “full cooperation of the staff.”
“Things went very well over at his first day at CFPB,” she said. “I think the legal outline shows very clearly who is in charge of that agency, and both he and the White House, as well as the general counsel for CFPB — who was appointed by [Cordray] — said that he has the legal standing to be there and serve as the director. And we all agree with that, and again, feel very confident moving forward.
Sanders added that English was “still the deputy director and has a legal standing in that capacity” but was not, in any way, legally allowed to act as the interim director.
Earlier in the day, Mulvaney had also pushed back against a staff-wide memo English had sent as “Acting Director” by emailing a staff memo of his own. In it, he instructed employees to “disregard any instructions you receive from Ms. English in her presumed capacity as Acting Director” and added that anyone who received such instructions should “please inform the General Counsel.”
During a televised press conference on Monday afternoon, Mulvaney — still acting as interim CFPB chief — said that he had already “imposed a 30-day freeze on the watchdog’s hiring, issuance of new rules or regulatory guidance, and payments from a civil penalties fund” in his new role as director, USA Today reported.
Mulvaney also promised that the CFPB under the Trump administration would be “dramatically different” from the way it was under President Obama and former director Cordray, who often drew Republicans’ ire for his crackdowns on financial institutions and butted heads with them over forced arbitration clauses in credit card company agreements. (As CNBC notes, Republicans recently overturned a CFPB rule banning such arbitration clauses, sparking outcry from consumer advocates.)
On Monday evening, citing the fact that English had already carried out business as acting CFPB director — including meeting with lawmakers and staff — English’s attorney, former senior CFPB litigation counsel Deepak Gupta, asked Kelly to issue a decision in the lawsuit “[as] expeditiously as possible”, in order to avoid further chaos.
“Everyone needs to know who is director of the bureau,” Gupta said.
Kelly’s decision is expected on Tuesday.
UPDATE: On Tuesday evening, Judge Kelly denied a request for an emergency order that would have blocked Trump from from appointing Mulvaney as the acting director of the CFPB.
BREAKING: Judge will not issue an emergency order blocking Trump from installing Mick Mulvaney as acting director of the CFPB. More shortly.
— Zoe Tillman (@ZoeTillman) November 28, 2017
Judge Kelly, a Trump appointee confirmed in September: "On its face, the [Federal] Vacancies Reform Act does appear to apply" to the appointment of acting director at CFPB. That's the law Trump administration cited as giving it power to appoint Mulvaney https://t.co/P07cSpXtpT
— Ryan Barber (@cryanbarber) November 28, 2017
“On its face, the [Federal] Vacancies Reform Act does appear to apply [to the president’s decision],” the judge wrote, according to National Law Journal reporter Ryan Barber.
— Daniel Press (@danielpress94) November 28, 2017