Although the first round in the battle over leadership of the Consumer Financial Protection Bureau went to President Donald Trump’s pick for the position, the fight continues, leaving the CFPB’s ongoing work very unsettled.

What happened

Just before outgoing Director Richard Cordray stepped down from his role at the CFPB, he appointed Chief of Staff Leandra English as deputy director in an apparent effort to circumvent any selection of an acting director by President Trump from taking over the leadership position. Ignoring Cordray’s maneuver, President Trump tapped Mick Mulvaney, already the director of the Office of Management and Budget (OMB), to take over as acting director at the CFPB.

English filed suit, but U.S. District Judge Timothy J. Kelly (a Trump nominee) sided with the president. Denying English’s request for a temporary restraining order, the court said the language of the Consumer Financial Protection Act, under which the deputy director serves as director in the event of the director’s “absence or unavailability,” did not apply to vacancy as a result of resignation.

Therefore, the Federal Vacancies Reform Act applied, putting the power to appoint a new director in the hands of the president, the court held. “On its face, the Vacancies Act does appear to apply to this situation,” Judge Kelly said.

On Dec. 6, Ms. English filed an amended complaint and a motion for a preliminary injunction. Judge Kelly has issued an aggressive scheduling order through the rest of December, with a hearing on Ms. English’s motion currently scheduled for Dec. 22. Any decision by Judge Kelly would be appealable to the U.S. Court of Appeals, D.C. Circuit.

In the meantime, Mulvaney has moved aggressively in managing the CFPB, in part apparently to demonstrate what he perceives as a flaw in the CFPB’s structure, in that it places an inordinate amount of unchecked power in the hands of just one individual, saying in an interview that the authority wielded by the director of the CFPB “should frighten people.”

His first day on the job, Mulvaney—who arrived with a bag of donuts in hand—ordered a 30-day freeze halting all new rulemakings, hiring (which has been partially lifted) and payments generated from enforcement actions. Sen. Elizabeth Warren (D-Mass.) called the move a “shutdown” of the CFPB and requested an investigation. As a result, the CFPB effectively is in a holding pattern.

Mulvaney also has indicated that he intends to add political appointees shadowing senior CFPB officials, which has triggered complaints regarding whether such appointments would be consistent with the independent nature of the agency. He is also reviewing a number of pending enforcement matters.

Mulvaney continued his efforts to hold on to the leadership position with a memo to employees instructing them to “disregard any instructions you receive from Ms. English in her presumed capacity as acting director,” he wrote. “If you’re at 1700 G St. today, please stop by the fourth floor to say hello and grab a donut.” He stated in a press conference that he does not intend to fire English, but also said that, in light of the pending litigation, “We typically don’t chat.”

Why it matters

The battle at the CFPB continues to rage on, with a new complaint filed this week by a credit union alleging that the president’s appointment of Mulvaney was unconstitutional and amounts to “an illegal hostile takeover of the CFPB.” The Lower East Side People’s Federal Credit Union argues that with Mulvaney at the helm of the CFPB, its members are at risk. The president “has purported to appoint an acting director whose mission is to destroy a bureau that protects thousands of the credit union’s members,” according to the New York federal court complaint, which details quotes from Mulvaney calling the CFPB “a sad, sick joke” and testifying before Congress, “I don’t like the fact that the CFPB exists, I’ll be perfectly honest with you.” Several amicus briefs can be expected in the pending litigation brought by Ms. English. Until the litigation is finally resolved, the situation at the CFPB will continue to be unstable.