The leadership of the Consumer Financial Protection Bureau remains under a cloud of uncertainty despite another Trump administration victory in the legal battle over who should be the agency's acting director.
A federal judge on Wednesday denied a request for a preliminary injunction to remove President Trump's appointee for the temporary job, White House budget director Mick Mulvaney. But Leandra English, the deputy director who has said she is the rightful acting director, is expected to appeal the decision.
Such a move would extend for weeks the unease among banks and consumer advocates about the direction of the independent watchdog agency created in the aftermath of the 2008 financial crisis.
"This is the beginning, not the end, of a legal journey," said Ed Mierzwinski, federal consumer program director at the nonprofit U.S. Public Interest Research Group, which was among several consumer groups that filed briefs supporting English's injunction request.
In addition, a separate lawsuit filed in federal court in New York by the Lower East Side People's Federal Credit Union, which also seeks an injunction to remove Mulvaney, is set for a hearing Friday.
Only a permanent director, confirmed by the Senate, would definitively resolve the leadership dispute in the near term, said Alan S. Kaplinsky, head of the consumer financial services group at law firm Ballard Spahr.
"The industry needs certainty when it comes to any federal agency. They need to know who's in charge and who's got authority and right now they don't," he said. "I'd be very reluctant to enter into any kind of agreement with the CFPB right now because I can't be assured that the director has authority."
But Kaplilnsky said the latest court ruling reduces the pressure on Trump to replace Mulvaney, who has moved quickly to put his stamp on the bureau, which writes rules and enforces consumer protections against banks and other financial institutions.
The law under which Trump appointed Mulvaney allows him to serve for as long as 210 days. The restriction is suspended if a nomination is pending in the Senate and the 210-day clock starts again if the Senate rejects a nomination.
Sen. Sherrod Brown (D-Ohio), a strong supporter of the bureau, said Thursday that the White House needs to act.
"This administration should swiftly nominate someone who will have full bipartisan support in the Senate and will protect consumers instead of special interests like Wall Street and payday lenders," he said.
But a White House spokesman didn't indicate Thursday that a nomination was coming soon.
"The administration is glad to see the courts once again recognize the president's lawful designation," said Raj Shah, principal deputy White House press secretary. "The president looks forward to acting director Mulvaney's continued work on behalf of American consumers."
Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia sided with Mulvaney over English in a 46-page decision.
The ruling came after Kelly denied a request by English last month for a temporary restraining order to remove Mulvaney and install her as acting director.
The restraining order decision could not be appealed, so English's attorney, Deepak Gupta, filed for a preliminary injunction. Kelly heard nearly two hours of arguments on the injunction Dec. 22.
The denial of the injunction request by Kelly, a Trump appointee, can be appealed to the U.S. Court of Appeals for the D.C. Circuit.
Gupta said he and English were disappointed in the decision, which hinged on which of two federal laws governed succession at the bureau.
"The law is clear: President Trump may not circumvent the Senate confirmation process by installing his White House budget director to run the CFPB part time," Gupta said on Twitter. "Mr. Mulvaney's appointment undermines the bureau's independence and threatens its mission to protect American consumers."
Gupta did not say if the ruling would be appealed and did not respond to a request for additional comment. But he had previously indicated English would appeal, saying that "I think everyone understands this court is not the final stop, this judge does not have the final word on what happens in this controversy."
Kaplinsky said an appellate panel could be made up of judges who are more liberal than Kelly so it would be in the White House's interests to make a permanent nomination.
"I certainly hope we see a nominee soon but I wouldn't bet on it," he said. "Clearly the White House is in the lead here because they won in the lower court but that could change very quickly on appeal."
One person reportedly under consideration for the permanent job is Mark McWatters, chairman of the National Credit Union Administration, the federal regulator for that industry. McWatters, a Republican, has the support of CFPB critic Rep. Jeb Hensarling (R-Texas), the powerful chairman of the House Financial Services Committee for whom he once worked as legal counsel.
But there are potential problems with McWatters.
The head of the Independent Community Bankers of America has publicly expressed concerns that McWatters is not as knowledgeable about banking regulations given his background in credit unions.
And McWatters was the subject of a critical article this week by the conservative Breitbart News Network website, which said former President Obama "thought so highly of McWatters he nominated him in 2016 to head up the Export-Import Bank, the poster child of crony capitalism reviled by virtually every conservative leader."
Obama actually nominated McWatters for a seat on the bank's five-member board.
Trump's choice of Mulvaney, an outspoken opponent of the bureau in the past, has sparked protests from Democrats and consumer advocates.
The dispute began Nov. 24 when Richard Cordray, a Democrat, stepped down as bureau director. He promoted English, his chief of staff, to deputy director and said she would be the acting director under a provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that created the bureau.
Within hours of Cordray's resignation announcement, Trump appointed Mulvaney to fill the post under the Federal Vacancies Act of 1998. The administration said that law allowed Trump to appoint an official who already had been confirmed by the Senate in another capacity to also serve as the bureau's acting director.
Kelly noted in his decision that both sides urged a quick resolution to the uncertainty about the bureau's leadership and said removing Mulvaney would not accomplish that.
"There is little question that there is a public interest in clarity here, but it is hard to see how granting English an injunction would bring about more of it," Kelly said.
"The president has designated Mulvaney the CFPB's acting director, the CFPB has recognized him as the acting director, and it is operating with him as the acting director," he said. "Granting English an injunction would not bring about more clarity; it would only serve to muddy the waters."