On Tuesday a federal judge denied a request by the Consumer Financial Protection Bureau’s second-in-command Leandra English to block White House budget chief Mick Mulvaney from taking over as the legal interim head of the watchdog agency.

On Tuesday a federal judge denied a request by the Consumer Financial Protection Bureau’s second-in-command Leandra English to block White House budget chief Mick Mulvaney from taking over as the legal interim head of the watchdog agency.

In his resignation letter, former CFPB director Richard Cordray named English as his heir apparent, but President Donald Trump countered later with his own nominee, Mulvaney, currently the director of the Office of Management and Budget. In a lawsuit launched Sunday evening, English claimed that she was the legal acting director under the Dodd-Frank Act and asked for a temporary restraining order against Mulvaney, who reported for CFPB duty at 1700 G Street with a bag of donuts Monday morning.

English argued that Mulvaney was too close to the Trump administration as a Cabinet official; however, District Judge Timothy Kelly shot down this assertion, saying that there was no legal basis to stop Mulvaney from holding both positions.

“Denying the president’s authority to appoint Mr. Mulvaney raises significant constitutional questions,” Kelly said.

English’s lawyer Deepak Gupta said this setback didn’t mark the end of this battle, but English would have to prove that the judge is wrong in an appeal, according to research from National Mortgage News.

The judge’s decision means that Mulvaney will remain in charge unless a court rules otherwise, according to press reports. Had the judge ruled in favor of English, Mulvaney would have been prevented from “asserting his authority” while the case went on.

The power struggle between Mulvaney and English began last Friday following the Nov. 16 resignation of Cordray, the polarizing Obama administration appointee who drew ire from bankers and real estate professionals alike for his aggressive pursuit of fraud perpetrated by banks, credit unions, securities firms, mortgage servicing operations and foreclosure relief services.

A budget hawk and supporter of financial deregulation, Mulvaney, a Republican, once called the CFPB a “sick, sad joke,” fueling concern that the Trump Administration intends to dismantle the agency, which launched in 2011 as a response to the financial crisis two years earlier. Last week, Trump himself called it a “total disaster” and vowed to “bring it back to life.”

Citing the agency’s rejected interpretation of the Real Estate Settlement Procedures Act (RESPA) involving payments under an anti-kickback provision last year, Brian Levy, an attorney with Katten & Temple in Chicago, said he was hopeful that Mulvaney would review the Consumer Financial Protection Bureau’s hazy enforcement practices.

Paul Bland, the executive director of Public Justice, a nonprofit organization that advocates for criminal and economic fairness, warned that deregulation in the real estate and mortgage industries may result in a repeat of the financial crises of 2008, in which reckless lending led to a housing bubble that eventually wreaked havoc on the economy.

Jotham Sederstrom contributed to this article.

Email Gill South.

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