WASHINGTON (Legal Newsline) - The deputy director of the Consumer Financial Protection Bureau has filed a lawsuit against President Donald Trump to block his naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

Leandra English filed her lawsuit in the U.S. District Court for the District of Columbia Sunday night, describing herself as the “rightful” acting director of the CFPB.

English argues the Dodd-Frank Wall Street Reform and Consumer Protection Act mandates that the deputy director “shall.... serve as the acting Director in the absence or unavailability of the Director.”

She contends Trump disregarded the statutory language in issuing a press release Friday evening designating Mulvaney as the acting director.

“Under this scenario, Mr. Mulvaney would seek to serve indefinitely as the interim head of a statutorily ‘independent’ agency while simultaneously occupying his current White House post,” English wrote in her nine-page complaint.

The White House, in its news release Friday, said Mulvaney will serve as acting director until a permanent director is nominated and then confirmed by the U.S. Senate.

“The President looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities,” according to the statement.

Earlier Friday, Richard Cordray officially stepped down as director of the bureau and, in doing so, named English as the bureau’s deputy director.

Cordray, a Democrat, has headed the Obama-era watchdog agency since its creation. He told colleagues in a message earlier this month that he was stepping down at the end of November.

“Leandra is a seasoned professional who has spent her career of public service focused on promoting smooth and efficient operations. As deputy director, we will continue to benefit from Leandra’s in-depth knowledge of the operational needs of this agency and its staff,” Cordray said in a statement.

English, who recently served as the agency’s chief of staff, argues Trump’s reliance on the Federal Vacancies Reform Act of 1988 in naming Mulvaney is misplaced.

“The Vacancies Act, by its own terms, does not apply where another statute ‘expressly… designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity’ -- which is exactly what the Dodd-Frank Act does,” she wrote. “The President’s interpretation of the FVRA runs contrary to Dodd-Frank’s later-enacted, more specific, and mandatory text.

“The President’s stance is also difficult to square with the relevant legislative history: An earlier version of the Dodd-Frank Act, which would have specifically allowed the President to use the Vacancies Act to temporarily fill the office, was eliminated and replaced with the current language designating the Deputy Director as the Acting Director.”

She also contends Trump’s attempt to appoint a still-serving White House staffer to displace the acting head of an independent agency is “contrary to the overall statutory design and independence” of the bureau. 

The CFPB was created by Dodd-Frank, which was passed in 2010 in response to the financial crisis of 2007-08 and the subsequent recession. The bureau has jurisdiction over banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the U.S.

English seeks a declaratory judgment and, on an emergency basis, a temporary restraining order to prevent the defendants from appointing, recognizing the appointment or acting on the appointment of an acting director.

The TRO motion was filed Sunday night, with English arguing she has a “clear legal entitlement” to the position of acting director.

“The equities strongly counsel maintaining the status quo and avoiding the confusion and irreparable harm that would follow from allowing the parties’ conflicting claims to go unsettled,” according to an accompanying memorandum filed Monday.

A private law firm, Gupta Wessler PLLC, is representing English. Judge Timothy J. Kelly is presiding.

Consumer watchdog group Allied Progress argues English should serve as acting director amid the legal battle, describing Trump’s move to name Mulvaney acting director as an “attempt to sabotage” English’s legitimacy.

“Consumers should expect the CFPB to continue its successful work holding big banks, credit card companies, payday lenders and other powerful Wall Street institutions accountable,” Executive Director Karl Frisch said in a statement.

“The President should quit playing games and nominate a director who will stand up for consumers, who isn’t a creature of the very industries the CFPB regulates, and who can earn a bipartisan confirmation in the Senate.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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