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Trump is attempting an 'end run,' says lawyer challenging Mulvaney appointment at CFPB

  • President Donald Trump has "every right" to name the director of the CFPB, but he is going about it the wrong way by naming Mick Mulvaney as the acting director, the attorney for Leandra English told CNBC.
  • Deepak Gupta said it's very clear that Congress put in a succession plan when it created the agency in the Dodd-Frank bill – the deputy director becomes the acting director until the Senate confirms a new director.
  • "What President Trump has done is an attempt at an end run," he said.

President Donald Trump has "every right" to name the director of the Consumer Financial Protection Bureau, but he is going about it the wrong way by naming Mick Mulvaney as the acting director, the attorney for Leandra English told CNBC on Monday.

Deepak Gupta has filed a lawsuit on behalf of English, seeking to block Mulvaney from taking over. English, the deputy director at the consumer watchdog group, insists she is the rightful acting director after outgoing director Richard Cordray named her for the role last week.

Gupta told "Power Lunch" it is very clear that Congress put in a succession plan when it created the agency in the Dodd-Frank reform bill — the deputy director becomes the acting director until the Senate confirms a new director.

"What President Trump has done is an attempt at an end run," he said.

"He's attempted to install a White House staffer, his OMB director, into the position without getting Senate confirmation and have that person, Mick Mulvaney, simultaneously serve as a White House official and as a head of an independent agency that's required by statute to be independent."

The Trump administration believes it will prevail, in large part because the CFPB's own general counsel issued a ruling that supports the White House move. Further, English filed the lawsuit on her own behalf, without the agency's backing.

Office of Management and Budget Director Mick Mulvaney (R) listens as President Donald Trump meets with members of the Republican Study Committee at the White House, March 17, 2017.
Jonathan Ernst | Reuters
Office of Management and Budget Director Mick Mulvaney (R) listens as President Donald Trump meets with members of the Republican Study Committee at the White House, March 17, 2017.

Mulvaney took charge of the CFPB's operations on Monday and told the staff to disregard any instructions from English in an official capacity.

Former Rep. Barney Frank, co-author of the Dodd-Frank legislation, said the law's intention was to protect the agency from politics.

"It does not operate programs. It defends individuals, by and large, whose rights are being transgressed. We knew that there would be enormous pressure to interfere with them," he said in an interview with "Power Lunch."

However, while his preference to lead the agency would be English, he admitted that it is not clear-cut as he would like.

"Legally, let's be honest, we're in Bush-Gore territory in some ways," he said. "I think my side is right. But it is also clear that people's view of the law here on the whole is influenced by what they want to see."

Adam White, research fellow at the Hoover Institution, believes that Mulvaney is the "rightful acting director" under the Federal Vacancies Reform Act.

The Vacancies Act predates Dodd-Frank, but Dodd-Frank does not amend or repeal the Vacancies Act, he said.

"It gave the president a choice. He could either designate a … temporary successor under the Vacancies Act or he could allow the deputy director to occupy the seat on an acting basis. President Trump chose option A," White told "Power Lunch."

Footing the bill?

Meanwhile, Gupta would not say who is paying English's legal bills, except that it is not English.

However, he is not working for free.

"We have a structure that is set up. There are legal defense funds that exist for precisely this reason," he said.

"It's just not appropriate for me to be talking about that right now. I think it's better addressed by ethics counsel in the appropriate way but we're satisfied that it's well within the law."

— CNBC's Kayla Tausche and Jeff Cox contributed to this report.