A federal judge held an emergency hearing but declined to rule immediately Monday afternoon on a request to bar President Trump from installing an acting director at the Consumer Financial Protection Bureau in place of the agency’s No. 2 leader, an Obama administration holdover.
U.S. District Judge Timothy J. Kelly of Washington heard arguments by the bureau deputy director Leandra English, who filed a lawsuit Sunday calling herself the “rightful acting director” according to a 2010 Dodd-Frank act, which established the influential watchdog agency.
Kelly said he would wait until government attorneys supplemented their arguments in a 40-minute hearing by filing a formal, written response Monday night defending Trump’s choice, White House Office of Management and budget director Mick Mulvaney, whose appointment they said was authorized under an earlier, 1988 law governing presidential vacancies in general.
Kelly, confirmed in September and one of two Trump nominees serving on the D.C. federal court, said he would notify both sides Tuesday “where we go from there.”
The hearing came toward the end of a head-spinning day of dueling actions by rival appointees seeking to lead the bureau. The CFPB was created after the financial crisis to target unfair or abusive practices by financial institutions offering consumer products, including credit cards, mortgages and loans.
Republicans have sought to rein in the agency for years as part of efforts to roll back banking industry regulations, saying it is unaccountable to elected officials and harms economic growth by unfairly burdening companies.
The Trump administration got its chance to wrest control Friday, when longtime director Richard Cordray resigned and promoted his chief of staff, English to deputy director, saying she would serve as acting director until the Senate confirmed his permanent replacement.
Trump hours later announced that Mulvaney would take the job.
Democrats and consumer advocates have supported the CFPB’s aggressive actions against big financial institutions, and in her lawsuit, English said Congress intended the bureau to be independent of political pressure from the White House.
Asked by Kelly why the court should undertake the “extraordinary remedy” of enjoining the president from exercising the power of his office, English’s attorney said, “I don’t deny it’s extraordinary. This is an extraordinary case.”
English’s attorney, Deepak Gupta, formerly the bureau’s senior litigation counsel, argued that English properly took over under an explicit plan of succession set out by the Dodd-Frank law when it created the CFPB, providing for a deputy to serve as acting director until a successor is confirmed.
Appointing Mulvaney, a “sitting White House official” and an outspoken critic of the bureau, to lead the agency would run counter to Congress’s intent and explicit provisions, Gupta said.
Gupta said English was not requesting that the president be barred from appointing a new bureau director subject to Senate confirmation, but that he be blocked from “appointing or recognizing” a temporary chief, and that Mulvaney be prohibited from taking charge.
Gupta asked that the judge rule as “expeditiously as possible” in a way that could be immediately appealed. “Everyone needs to know who is director of the bureau,” Gupta said.
Gupta said that English also carried out bureau business Monday, going into the bureau Monday morning, emailing employees, and meeting with lawmakers including Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) in her capacity as acting director through the afternoon.
Arguing for the government, Brett Shumate, deputy assistant attorney general for federal programs, said that the Federal Vacancies Act, enacted in 1988, gave the president the authority to appoint Mulvaney, citing a Friday memorandum by the Justice Department’s Office of Legal Counsel, and a memo distributed Monday by the bureau’s current general counsel.
Mulvaney was at the bureau Monday, issuing orders, meeting with senior aides and reviewing transition briefing materials, Shumate said, and the imposition by a judge of a different leader would only sow more confusion and disruption.
Asked by Kelly if the government would agree that English would not be fired to remove some of the urgency from the matter, Shumate said, he could not “give any representation or assurance on that score.”