Court rejects bid to block Donald Trump from appointing interim consumer watchdog director

White House says it 'applauds the court's decision' saying it provides 'further support for the president's rightful authority'

Mick Mulvaney at the Consumer Financial Protection Bureau (AP)

President Donald Trump has scored a victory in the battle for control of the nation's top consumer financial watchdog, with a federal judge refusing to block the president's choice to temporarily run the agency.

Judge Timothy Kelly declined to stop the president from putting Mick Mulvaney in place as the acting director of the Consumer Financial Protection Bureau (CFPB). In doing so, Judge Kelly ruled against Leandra English, the CFPB's deputy director, who had requested an emergency restraining order to stop Mr Mulvaney from becoming the acting director.

Both Mr Mulvaney and Ms English claimed to be the rightful acting director, with each citing different federal laws. The leadership crisis developed over the weekend after the CFPB's permanent director, Richard Cordray, resigned and appointed Ms English as his successor. Shortly afterward, the White House announced that Mr Mulvaney, currently budget director, would take over the CFPB on an interim basis.

The judge's ruling is not the final decision in the case. But in making his decision, the judge said that Ms English had not shown a substantial likelihood that she eventually would succeed on the merits of her case. The judge's decision is not immediately appealable.

Judge Kelly was nominated by President Trump and was confirmed by the Senate in September.

The CFPB was established after the financial crisis to make sure customers are not being exploited and that banks are complying with the consumer protection laws on the books. Mr Cordray, appointed by President Barack Obama, was criticised by congressional Republicans as being overzealous, but lauded by consumer advocates for aggressively going after banks for wrongdoing. On Monday, Mr Mulvaney said the CFPB under a Trump administration would act differently than the agency under the Obama administration.

Lawyers for Ms English will have to make a choice about how to proceed. After the hearing, a lawyer for Ms English, Deepak Gupta, said he hopes to be able to move the case along quickly.

“I'm going to have to explore the options with my client, so I don't know what the next step is and I'm not going to say that right now,” he said, adding options include asking the judge for a final decision on the merits of the case.

Mr Gupta said it is not in his client's interest or the government's interest to have a “cloud of impropriety and uncertainty hanging over the bureau for any longer than is necessary.”

The White House said it “applauds the court's decision,” saying it provides “further support for the president's rightful authority to designate Director Mulvaney as acting director of the CFPB.”

Mr Trump's authority to install Mr Mulvaney was backed up by Mary McLeod, the CFPB's general counsel, who wrote a memo over the weekend agreeing with the White House that Mr Mulvaney should be recognised as acting director. The Office of Legal Counsel, which acts as a legal adviser to the president, also argued that Mr Mulvaney, not Ms English, was the legitimate acting director of the agency.

Associated Press