Battle over control of federal consumer watchdog heads to court

Late Sunday, one of two officials who will show up on Monday to lead the Consumer Financial Protection Bureau filed suit, asking a federal court to block the other claimant. The fight over short-term control of the top U.S. consumer financial watchdog began Friday, when CFPB director Richard Cordray resigned and appointed his chief of staff, Leandra English, deputy director and thus, under the Dodd-Frank financial reform law, acting director. President Trump then appointed his White House budget director, Mick Mulvaney, acting director, citing a more general law, the Federal Vacancies Reform Act.

English filed suit in U.S. District Court in Washington, D.C., asking for a temporary restraining order and recognition of her claim to be "rightful acting director." Trump's "purported or intended appointment of defendant Mulvaney as acting director of the CFPB is unlawful," English's suit argues. "The president'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."

Congress created the CFPB with an unusual amount of autonomy in the wake of the 2008 financial crisis, to insulate it from political pressure. Trump will nominate a director soon, and that director, once approved by the Senate, is expected to scale back the CFPB's scope and regulatory activity. Under Cordray, the CFPB has gone after banks and abusive debt collection agencies, winning debt cancellation for 29 million Americans and nearly $12 billion in refunds. Banks have bristled and Republicans accused the bureau of overreach, and Mulvaney has called the CFPB a "joke" and urged its dissolution. "Wall Street hates it like the devil hates holy water," Sen. Dick Durbin (D-Ill.) said on CNN Sunday.

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The Justice Department Office of Legal Counsel and CFPB general counsel Mary E. McLeod have sided with the White House, but until the courts settle the dispute, all CFPB actions will likely be subject to legal challenge.