Judge Backs Mulvaney as CFPB Acting Director

Mick Mulvaney. Credit Gage Skidmore via Wikimedia Commons

In a second victory for the White House over the battle for control of the Consumer Financial Protection Bureau, a federal judge denied a preliminary injunction request that would have removed Acting Director Mick Mulvaney from his post.

English - who was appointed to lead the CFPB by predecessor Richard Cordray - got into a perplexing dilemma after President Trump ignored Cordray's orders and tapped Mulvaney as the acting financial protection czar, even though he was already heading the government's Management and Budget Office.

Kelly noted in his Wednesday night ruling that Trump's executive authority could "override" the order of succession laid out in the Dodd-Frank Act, the Obama-era federal law that founded the CFPB. President Donald Trump selected Mulvaney as the acting director a year ago citing the Federal Vacancies Reform Act and sparking a debate over which legal precedent determines the regulator's line of succession. "Such authority appears to lack any precedent among other independent agencies". "As an initial matter, the court must determine whether the FVRA-independent of whether it is displaced by the Deputy Director provision of the Dodd-Frank Act-authorizes the president's appointment of the CFPB's acting director on its own terms".

"The moving party must meet a higher standard than in the ordinary case by showing clearly that he or she is entitled to relief or that extreme or very serious damage will result from the denial of the injunction", Kelly said.

English asked Kelly to undo Trump's appointment of Mulvaney, but he ruled that the president was within his rights as chief executive.

On Nov. 26, English filed her lawsuit challenging Mulvaney's appointment in the US District Court for the District of Columbia.

Kelly came to the same conclusion Wednesday, denying English's request for a preliminary injunction. "English had not shown a substantial likelihood of success on the merits, and is unlikely to suffer irreparable harm". The central question is whether the Federal Vacancies Reform Act, the law President Trump used to appoint Mulvaney, is superceded by the Dodd-Frank Act, which says the deputy director is the rightful acting head of the CFPB once a director leaves. In his written opinion, Judge Kelly said, "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".

But the same day that Cordray announced he was leaving, the White House announced that Trump had appointed Mulvaney to serve as the acting director under the Federal Vacancies Reform Act, which gives the president the power to fill open seats in federal agencies.

"Mulvaney's appointment undermines the bureau's independence and threatens its mission to protect American consumers", said Deepak Gupta, a lawyer with the firm Gupta Wessler.

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