A federal judge is prepared to hear a legal challenge Tuesday afternoon in Washington over who should be acting director of the Consumer Financial Protection Bureau, the independent agency created in 2011 to protect consumers from predatory behavior by companies in the financial sector. Leandra English, the deputy director of the agency, is seeking a temporary restraining order to keep Trump’s appointee for acting director, Office of Management and Budget Director Mick Mulvaney, from serving in that role.
English contends the law is clear: The Dodd-Frank legislation that created the CFPB says the deputy director of the agency takes over for the director when he or she departs or is otherwise unavailable, until the Senate can confirm a replacement. Before he resigned, Cordray made English, his former chief of staff, deputy director.
But Trump believes that the 1998 Vacancies Reform Act gives him the power to appoint an acting director—in this case, Mulvaney. The legal dispute is whether the VRA supersedes the clear language of the Dodd-Frank legislation; many legal scholars believe that it does not.
Deciding this will be Federal District Court Judge Timothy Kelly—a Trump appointee who is brand-new to the bench, having just been confirmed in September. Kelly was one of the many judges the Trump administration and Republicans in Congress have been rushing full-speed ahead to confirm.
All nine Democrats on the Judiciary Committee objected to the timing of Kelly’s confirmation hearing on June 28, just three weeks after Trump appointed him. The American Bar Association could not evaluate him and issue a qualification rating, which is without any recent precedent.
Kelly does appear to be qualified, having worked as an assistant US Attorney and in the Department of Justice. He was confirmed 94-2. But he is emblematic of Trump’s mad rush to stock federal courts with appointees—and now we might see why.
Given that Kelly was just appointed by Trump, and may well have ambitions beyond this low federal court, some observers think his decision in this case might be a foregone conclusion. “I’d hate to lose faith in the independence of the judiciary, but I imagine he was appointed because he has certain views in line with the Trump administration and that may include views about the authority of the president,” Richard Horn, a former CFPB attorney, told American Banker.
Senator Elizabeth Warren, who came up with the idea of a CFPB and has fiercely defended the agency, told Reuters Tuesday there is “no doubt” the legal fight will continue in a federal appeals court—perhaps a signal that she, too, is pessimistic about Kelly’s ruling.
Before the case made it to court, the CFPB general counsel said she believed Trump was correct, that the VRA applies, and that Mulvaney is the appropriate acting director. Her analysis relied heavily on a memo from the Office of Legal Counsel written by Steven Engel—who represented a payday lender in front of the CFPB last year, as my colleague David Dayen recently pointed out. Some legal scholars have blasted the memo; Harvard Law Professor Laurence Tribe called it “completely incoherent.”
This all started with a legally dubious move by the administration, designed to protect powerful interests. The move was given a flimsy rubber stamp of approval by Department of Justice partisans. The case now heads before a Trump-appointed judge who was rushed through the Senate without proper vetting. Unfortunately, we should get used to this scenario, because it will be increasingly common in the months and years ahead as Trump fully flexes his ability to reshape the federal bench and the legal functions of the executive branch. The federal judiciary has so far been able to stop some of Trump’s worst impulses, like the Muslim ban, but he’s rushing to appoint all these new judges for a reason.