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Monday December 11th, 2017 6:28AM

2 fight for control of consumer watchdog; court to weigh in

By The Associated Press
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WASHINGTON (AP) — With emails, tweets and doughnuts, the two dueling acting directors battled for control of the nation's top financial watchdog agency, the Consumer Financial Protection Bureau, on Monday.

Leandra English, who was elevated to interim director of the bureau late last week by its outgoing director, sent staff an email offering Thanksgiving wishes. President Donald Trump's choice for the role — White House budget director Mick Mulvaney — then emailed staff to tell them to "disregard" any instructions from English.

Laying down markers in what has quickly become a war of optics, both signed their missives "Acting Director."

English has filed a lawsuit seeking a temporary restraining order to block Mulvaney from taking over the bureau. Judge Timothy Kelly, a Trump appointee approved recently by the Senate, will hear arguments on the case late Monday afternoon.

Mulvaney, speaking to reporters at the bureau, announced he was imposing a 30-day freeze on hiring and new rulemaking. Despite previous comments calling the agency a "joke" and an example of bureaucracy run amok, he said the bureau would remain functioning.

"This agency will stay open. Rumors that I'm going to set the place on fire, or blow it up or lock the doors are completely false," he said. "I am a member of the executive branch of government. We intend to execute the laws of the United States."

Mulvaney said the day went smoothly, though he noted the power struggle may be awkward for people who know English. Responding to news reports about the conflicting leadership, he said, "There was one person today who showed up at work claiming to be director. She wasn't here."

Meanwhile, in a show of support, top Senate Democrats including Senate Minority Leader Chuck Schumer and Sen. Elizabeth Warren of Massachusetts, met with English.

Earlier in the day, it was a battle of optics as Mulvaney and English jostled for control via emails, tweets and doughnuts.

Mulvaney arrived Monday morning at the agency with doughnuts, and his staff tweeted out photos of him meeting with agency division heads. Meanwhile, English sent a department-wide email saying she hoped everyone had a great Thanksgiving.

Meanwhile, Mulvaney quickly responded to English's email, instructing CFPB staff to "disregard" any directives from her.

English was promoted from chief of staff to deputy director by Richard Cordray as he prepared to resign last Friday. Cordray was appointed to the position by President Barack Obama and has been long criticized by congressional Republicans for being overzealous but lauded by consumer advocates for aggressively going after banks for wrongdoing, like in the case of Wells Fargo. He was one of the last Obama-era political holdouts.

White House press secretary Sarah Huckabee Sanders said at Monday's briefing that Mulvaney has "taken charge" of the bureau and has the "full cooperation" of the staff.

At the center of the controversy are two laws: the Dodd-Frank Act, the law passed after the financial crisis that created the bureau, and the Federal Vacancies Reform Act, which gives the president authority to appoint temporary department heads while their permanent nominees are approved by the Senate.

While the Vacancies Act does allow a president to appoint acting directors at agencies like the CFPB, the Dodd-Frank Act has specific language that seems to indicate that only a deputy director can step into the acting director position. English was elevated to the deputy director position shortly before Cordray resigned.

But English's push to be recognized as the legitimate acting director took a blow Monday after a memo was released from Mary McLeod, the CFPB's general counsel, saying she agreed with the White House that Mulvaney should be recognized as acting director.

The Office of Legal Counsel, which acts as a legal adviser to the president, also argued that Mulvaney, not English, was the legitimate director of the department.

One straightforward solution to the issue of who runs the CFPB is for Trump to nominate his own permanent director. But it may take several weeks for someone to be nominated and even months until the Senate were to confirm his or her appointment.

Until the issue of who is in charge is cleared up, any actions taken by the CFPB are likely to come under legal scrutiny from the banks, credit card and other financial companies that the agency oversees. No fines are likely to be imposed or new regulations written.

___

Sweet reported from New York. Associated Press writer Julie Carr Smyth contributed from Columbus, Ohio.

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