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Trump administration warns of CFPB disruptions in court filing

Key Points
  • The fight for control of the U.S. consumer watchdog agency intensified on Monday.
  • Mick Mulvaney, President Donald Trump's pick to run the Consumer Financial Protection Bureau, imposed a hiring freeze and halted any new regulations.
  • Mulvaney is being sued by Leandra English, an Obama-era appointee to the agency who argues that she is the consumer bureau's rightful leader.
Mick Mulvaney leaves the Consumer Financial Protection Bureau (CFPB) building after a meeting in downtown Washington D.C., November 27, 2017.
Carlos Barria | Reuters

The Trump administration has warned that granting a temporary restraining order against the president for control of the U.S. consumer watchdog agency would be an extraordinary intrusion into the executive branch and harm the agency.

White House budget director Mick Mulvaney, directed by Republican President Donald Trump to assume control of the Consumer Financial Protection Bureau, was sued late on Sunday by an Obama-era appointee who argued that she is its rightful acting director.

In a filing in U.S. District Court in Washington just before midnight on Monday, the Trump administration responded to Leandra English's lawsuit seeking to block Mulvaney from becoming acting director of the small agency he sought to abolish when he was a congressman.

"A temporary restraining order would radically alter the status quo, disrupt the orderly operation of the agency, and throw into doubt whether the CFPB, under the leadership of an Acting Director, is accountable to the President, or to anyone," according to the filing.

English was tapped on Friday by outgoing Director Richard Cordray, a Democrat appointed CFPB director by former President Barack Obama, to lead the agency until a new director was confirmed by the U.S. Senate, a process that could take months.

Hours later that day, Trump asked Mulvaney to take on the duties of leading the regulatory agency on an interim basis.

The CFPB was created to crack down on predatory financial practices after the 2007-2009 financial crisis ended with a $700 billion taxpayer bailout of banks.

The president has a right to name a permanent CFPB director, officials agree. There are dueling claims, however, about who leads the agency in the meantime.

Both sides presented their arguments during an emergency hearing in U.S. District Court in Washington on Monday. Timothy Kelly, a Trump-appointed judge, said the issues raised were "extremely important and complicated."

The judge and both sides said they hoped the case would be decided in the next few days.

Trump has long sought to weaken or abolish the 1,600-employee agency, saying too many regulations are crippling banks and harming the economy.

Democrats say the government needs to oversee consumer financial products such as mortgages and have regulatory powers over large non-bank financial companies to protect borrowers and avoid another financial crisis.

CORRECTION: This article has been updated to reflect that the lawsuit was filed late on Sunday, instead of Monday.