A federal court rejected efforts by anti-Trump forces to take acting control of the 1,600-employee Consumer Financial Protection Bureau, giving the Trump administration a high-profile victory Tuesday in a partisan clash with Democrats and appointees held over from the Obama administration.
U.S. District Judge Timothy Kelly denied a bid by Leandra English, an employee at the CFPB who claims to be acting director, from blocking White House budget director Mick Mulvaney as acting head of the agency.
The White House hailed the ruling.
“It’s time for the Democrats to stop enabling this brazen political stunt by a rogue employee and allow acting Director Mulvaney to continue the bureau’s smooth transition into an agency that truly serves to help consumers,” said White House spokesman Raj Shah.
Ms. English’s attorney, Deepak Gupta, has predicted an appeal no matter which side won.
Some workers at the bureau are expressing anger at outgoing Director Richard Cordray for showing “cronyism” in delegating Ms. English as his replacement before he quit last week.
The American Banker reported that “staff were upset by Cordray’s 11th-hour gambit during a holiday weekend, typically a time when the only news that is released is the kind people want to bury. They were also angry at his choice, arguing that Ms. English was not experienced enough for the job.”
Conservatives have opposed the CFPB ever since it was created by the 2010 Dodd-Frank financial regulation law as a watchdog for Wall Street. Liberals such as Sen. Elizabeth Warren, the Massachusetts Democrat who helped create the agency, have championed the CFPB as a needed ally for consumers ripped off by big banks, credit card companies and payday lenders.
Americans for Limited Government President Rick Manning said the federal court ruling should persuade Ms. English to “cease and desist all efforts to undermine the president’s constitutional and legal authority.”
“If she is unwilling to, she should submit her resignation,” Mr. Manning said.
Hours before the judge’s ruling, Ms. Warren and other liberals held a protest over the Trump administration’s “coup” at CFPB headquarters in Washington, while Mr. Mulvaney ate lunch calmly at his desk four floors above the protesters’ chants and banging drums.
“For six years, this agency has fought to keep people from getting cheated,” Ms. Warren told activists. “Now it is time for us to fight for the agency.”
As protesters chanted “Hey hey, ho ho, Mick Mulvaney’s got to go,” the target of their ire was grabbing a quick bite at his new office, where Mr. Trump installed him Monday. An aide said the scene indoors at the CFPB was “calm and orderly.”
Ms. English said Tuesday that she was still working at the agency she claims to lead, taking actions that continue to challenge Mr. Mulvaney’s control of the federal bureau.
Ms. English said in a statement that she planned to spend the day at the CFPB “taking calls and meetings with external stakeholders and bureau staff.”
After the ruling by Judge Kelly, whom Mr. Trump appointed to the bench in September, Consumer Bankers Association President and CEO Richard Hunt said the industry group looks forward “to working with acting CFPB Director Mick Mulvaney to bring transparent and balanced consumer protections to all customers and small businesses.”
“Many actions conducted previously by the CFPB as well as those that are pending warrant a thorough review, and we support Mr. Mulvaney’s previous comments concerning a five-person bipartisan commission,” Mr. Hunt said.
Mr. Manning said Mr. Cordray’s “political power grab” would have effectively “set the precedent that appointed bureaucrats could choose their successors without any input from elected officials.”
“Cordray clearly was more interested in creating a media crisis to benefit his anticipated run for the Democratic nomination to be governor of Ohio than he was in upholding the rule of law,” Mr. Manning said.
Mr. Mulvaney took over at the CFPB on Monday, but Ms. English also tried to assert her authority as the hand-picked successor of Mr. Cordray.
Mr. Trump said he has authority under a federal vacancies act to appoint an interim chief at CFPB, while Ms. English argued that the law that created the agency gives her control as Mr. Cordray’s hand-picked deputy director.
Competitive Enterprise Institute General Counsel Sam Kazman said the nonprofit group was “glad to see this attempt at bureaucratic self-perpetuation fail.”
The fast-moving litigation surfaced Sunday night, when Ms. English filed suit to block Mr. Mulvaney from taking temporary control of the agency. He is a harsh critic of CFPB, arguing that the bureau regularly overstepped its authority under Mr. Cordray to impose millions of dollars in civil penalties on businesses for wrongdoing in consumer fraud cases.
While control of agency was playing out in court, some liberal activists said they view the fight as an urgent opportunity to prove to voters that the Democratic Party still stands for something.
Adam Green, co-founder of the Progressive Change Campaign Committee, said voters in recent focus groups in Pennsylvania were “very confused about the difference” between Democrats and Republicans.
“Many people did not instinctively say that the Democratic Party stands for the little guys and the Republicans stand for the big bucks guys, even though that’s true,” Mr. Green said. “The Democratic brand and the Democratic message of fighting for the little guy needs to be a lot clearer. [Voters] don’t see Democrats delivering on the results. We need to show people that we are delivering.”
Sen. Jeff Merkley, Oregon Democrat, told demonstrators at the CFPB that the 2010 Dodd-Frank financial law spells out that Ms. English, the agency’s deputy director, is the rightful person to become its acting director.
“There is a legitimate director right now, and that person’s name is Leandra English. Not Mick Mulvaney,” Mr. Merkley said.
The lawmaker said Mr. Mulvaney “dislikes the CFPB enormously.”
“He doesn’t like that there’s protection against predatory payday lending,” Mr. Merkley said. “We don’t want a lapdog for predatory lenders; we want a watchdog for American families.”
Mr. Mulvaney said after his first day on the job that the more he learns about the agency’s workings, the more he dislikes it.
“I still think it is an awful example of a bureaucracy that has gone wrong. It is almost entirely unaccountable to the people who are supposed to oversee it or pay for it,” he told reporters. “I’m just learning about the powers that I have as acting director. They would frighten most of you. They would probably worry you to think about how little oversight Congress has over me now as I’m the director, how little oversight the committees have over how CFPB functions.”
Ms. Warren, whose role with the agency propelled her political career at the same time, said the CFPB has “helped” 29 million Americans receive repayment in consumer fraud cases.
“Donald Trump and congressional Republicans want to make this all about politics, but this isn’t about politics,” Ms. Warren said. “This is about what is fair.”
Some in the banking industry say Congress is to blame for creating a CFPB led by a sole director rather than a five-member appointed commission or board, as with many other federal agencies.
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