Trump appointed Mulvaney to the temporary post late last year after the agency’s former director, Richard Cordray, announced he was stepping down. But by then, Cordray had already named his former chief of staff, English, as acting director, setting up a partisan battle for control of the powerful agency.
“The Administration is glad to see the courts once again recognize the President’s lawful designation. The President looks forward to Acting Director Mulvaney’s continued work on behalf of American consumers,” Raj Shah, White House principal deputy press secretary, said in a statement.
English’s attorneys have argued that the 2010 Dodd-Frank Act, which established the CFPB after the financial crisis, laid out a specific plan of succession authorizing the deputy director to take over until a White House nominee is confirmed by the Senate. Also, they said, Mulvaney cannot wear two hats by simultaneously leading the independent financial regulator while serving as director the Office of Management and Budget.
“We are disappointed in today’s decision,” Deepak Gupta, English’s attorney, said in a statement. ”The law is clear: President Trump may not circumvent the Senate confirmation process by installing his White House budget director to run the CFPB part time. Mr. Mulvaney’s appointment undermines the Bureau’s independence and threatens its mission to protect American consumers.”
Gupta did not indicate whether English would appeal the decision.
The White House has dismissed concerns about Mulvaney serving as the agency’s acting director. Trump has authority under an earlier law, the 1998 Federal Vacancies Reform Act, to appoint Mulvaney, the White House has said, noting that the Justice Department’s office of legal counsel and the CFPB’s general counsel supported that position.
Kelly, a Trump appointee who joined the federal court in Washington in September, previously sided with the Trump administration in November, denying English a restraining order to prevent Mulvaney from taking over the agency. English then applied for a temporary injunction, which Kelly denied Wednesday.
“There is little question that there is a public interest in clarity here, but it is hard to see how granting English an injunction would bring about more of it,” Kelly said in the ruling. “The President has designated Mulvaney the CFPB’s acting Director, the CFPB has recognized him as the acting Director, and it is operating with him as the acting Director. Granting English an injunction would not bring about more clarity; it would only serve to muddy the waters.”
In the less than two months that Mulvaney has taken control of the CFPB, he has moved aggressively to reshape an agency he once criticized as a “joke.” Republicans and the banking industry have complained that the CFPB, created in reaction to the global financial crisis, lacks accountability and that its rulemaking has made it harder for consumers to get loans. House Republicans approved legislation last year that would strip the CFPB of many of its powers.
Democrats and consumer groups have defended the CFPB, which has collected $12 billion in fines from banks and other financial firms over the last six year. They say they worry that the CFPB will lose its independence from the White House with Mulvaney in charge.
Spencer S. Hsu contributed to this report.