Trump Wins Opening Round In Legal Battle Over Consumer Watchdog Agency

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In a ruling from the bench Tuesday afternoon, Judge Timothy Kelly - a Trump appointee - declined to stop on an emergency basis the president from putting in place Mick Mulvaney, now the White House's budget director. They also say that Mulvaney, who once called the CFPB "a joke...in a sick, sad kind of way" is not the person who should be running it.

Mulvaney again on Tuesday told CFPB staff to "disregard" instructions from English, who he said had sent at least one additional email on Tuesday "purporting to act as the Acting Director".

In denying English's request for a temporary restraining order, U.S. District Judge Timothy J. Kelly acknowledged that the case raised consitutional issues.

Joining the fight on English's behalf were about two dozen current and former members of Congress who told Kelly the president's choice of his White House budget director to temporarily helm the CFPB threatened the agency's ability to operate independently as designed.

Hours later, Trump said Mulvaney would lead the agency on an interim basis, sparking an unprecedented showdown.

English argued in a lawsuit filed Sunday that she should hold the position as acting director, in keeping with a sweeping regulatory reform law known as the Dodd-Frank Wall Street Reform Act that established the consumer bureau in the aftermath of the national financial crisis.

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Mulvaney, a former Republican congressman who is already spearheading the Trump administration's efforts to roll back regulations across the federal government, now controls an agency whose decisions impact any American with a checking account, mortgage, credit card or consumer loan.

Office of Management and Budget (OMB) Director Mick Mulvaney speaks to the media at the U.S. Consumer Financial Protection Bureau (CFPB), where he began work earlier in the day after being named acting director by U.S. President Donald Trump in Washington November 27, 2017.

Trump has long sought to weaken or abolish the 1,600-employee agency, saying too many regulations are suffocating lending.

"I would expect a sea change", said Alan Kaplinsky, head of the consumer financial services group for the law firm Ballard Spahr.

Appointing Mulvaney, a "sitting White House official" and an outspoken critic of the bureau, to lead the agency would run counter to Congress's intent and explicit provisions, Gupta said. English, according to a source familiar with the matter, also was present at the bureau Monday morning, but it was not immediately clear if she and Mulvaney interacted.

In an interview with Reuters on Tuesday, Democratic U.S. Senator Elizabeth Warren, who conceived the CFPB, said she has "no doubt" the case will be appealed, regardless of which side prevails. Both the Justice Department's Office of Legal Counsel and the bureau's own general counsel have sided with the president's appointment.

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