Judge rules against CFPB's English, says Mulvaney in charge

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WASHINGTON — Office of Management and Budget Director Mick Mulvaney is the legal interim head of the Consumer Financial Protection Bureau, a federal judge declared on Tuesday.

District Judge Timothy J. Kelly declined to grant a temporary restraining order against Mulvaney as part of a lawsuit by CFPB Deputy Director Leandra English that claimed she was the legal acting director under the Dodd-Frank Act. She argued in part that he was too close to the Trump administration as a Cabinet official.

"There's nothing in the statute that I can find that will prevent Mr. Mulvaney from holding both positions," Kelly said.

The case is not necessarily over. Deepak Gupta, English's lawyer, told reporters after the ruling that she would appeal.

"Everyone understands this court is not the final stop. This judge does not have the final word on what happens in this controversy and I think he understands that,” said Gupta.

Still, the decision is a significant, and perhaps ultimately fatal, blow to English's efforts to assert control.

"It's possible for her to appeal, but it would be difficult to get it granted and she would not have any more claim to the acting directorship," said R. Andrew Arculin, a partner at Venable. "She would have to convince the appeals court that the judge was wrong and that it needs to be resolved now, and that's a higher burden. It's pretty difficult to get the court to hear it."

Since early Monday morning, Mulvaney has acted as head of the bureau, arriving with doughnuts and meeting with senior staff. He even started his own Twitter account on Tuesday, @CFPBDirector, making it clear he was in charge. In a press conference on Monday, Mulvaney pledged "dramatic" changes in how the bureau is run, though he denied rumors he was there to shut the place down.

"The agency will stay open," Mulvaney said. "Rumors that I will set the place on fire or blow it up or lock the doors are false. I’m a member of the executive branch of government. We execute the law."

The judge's decision means that Mulvaney will remain in charge unless a court rules otherwise. Had English prevailed, it would have stopped Mulvaney from asserting his authority while the case was worked out.

English's lawsuit claimed that she was the rightful acting director of the CFPB because the Dodd-Frank Act says that the bureau's deputy director will serve as acting director in the "absence or unavailability of the director."

But the White House, along with the Justice Department and the CFPB itself, had rejected that interpretation. All three said that the Federal Vacancies Reform Act takes precedence over Dodd-Frank in giving the president broad authority over appointments.

Judge Kelly agreed.

"On its face, the Vacancies Reform Act does appear to apply to this situation,” he said.

Democrats had filed legal briefs in the case supporting English. In part, they argued that the legislative history of Dodd-Frank made it clear that Congress intended for the deputy director of the bureau to serve as acting director.

But Kelly said he was "dubious of legislative history" and that it is important that statutes read consistently "when possible."

He also said that there wasn’t an express provision in the Dodd-Frank Act that said the law should overrule the Federal Vacancies Reform Act when a director is unavailable.

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Dodd-Frank Policymaking Litigation CFPB