By Lawrence Hurley

By Lawrence Hurley


WASHINGTON (Reuters) - A U.S. appeals court on Thursday rejected separate bids by 16 states and two Democratic lawmakers to defend the U.S. Consumer Financial Protection Bureau in a legal battle that could defang the agency created under former President Barack Obama.


In a brief order, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit denied a request to intervene filed by the states, including New York and Connecticut. The court also rejected similar motions filed by nonprofit consumer groups and two lawmakers, U.S. Senator Sherrod Brown of Ohio and congresswoman Maxine Waters of California, also seeking to defend the board.


The state officials, led by Connecticut Attorney General George Jepsen, said in a court filing they were concerned the Trump administration would fire the agency's independent director, Richard Cordray, who was appointed by the Democrat Obama.


The agency was created during Obama's presidency in the 2010 Dodd-Frank Wall Street reform law.


The court ruled last October that the structure of the agency, charged with guarding consumer finances, was unconstitutional. The agency immediately asked the court to reconsider its decision but the Trump administration could drop the appeal.

The state officials asked to be able to defend the agency in the lawsuit brought by mortgage lender PHH Corp and ensure the case is not declared moot if Trump's administration drops the appeal of the ruling.

Under the 2010 law, the director can be fired only "for cause," limiting a president's ability to remove him. The appeals court ruled that this restriction was an unlawful limitation on presidential power.

(Reporting by Lawrence Hurley; Editing by Will Dunham)