Audio problem: When Janis shouts at Cady out of Damian's car, Cady says "It's not my fault you're like in love with me, or something." After she says this, her mouth visibly moves saying more words, but no audio is heard. (00:58:40)
Audio problem: When the Spring Fling Queen nominations are being announced applause can be heard for both Janis and Cady but no one in the class is clapping.
Answer: Regina enjoys manipulating people, and she views Cady as a relatively easy person to manipulate, finding her more useful/amusing to keep in their circle. It's a running theme of the film that the friendships between all of the Plastics is very tenuous, because of the catty, manipulative nature of the girls.
Purple_Girl
Also, if Regina tried to ban Cady, people might think she was threatened by Cady. Better to keep Cady around and attack her in subtle, manipulative ways.