Bid to Dismantle CFPB Rejected by En Banc Court

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Bid to Dismantle CFPB Rejected by En Banc Court

The decision reverses a 2-1 ruling in 2016 by a three-judge panel of the court that found that bureau's structure violated the Constitution's separation of powers because it limited the president's authority.

Although the court upheld the CFPB's structure, it tossed out penalties that the CFPB had issued to PHH Corp., a mortgage services firm and the plaintiff in the case.

As stated on the bureau's website: "Administrative adjudication proceedings are formal adversarial proceedings conducted by an administrative law judge, who issues a recommended decision to the CFPB director".

Finally, the majority held that the functions of the CFPB and its Director, unlike, for example, the Secretary of State or another Cabinet officer, are not core executive functions, and financial and consumer protection regulators have always been afforded a degree of independence, citing the FTC, the Federal Reserve, the FDIC, and others as examples.

Court of Appeals for the District of Columbia Circuit made the ruling in a battle over whether the president could remove the director at will. "Independence has always been associated with financial regulators with wide latitude to oversee and steady financial markets and the national economy", the ruling says.

Replacing an earlier ruling that the CFPB's structure was unconstitutional and that there were insufficient checks on the power of its director, the Washington-based appeals court concluded that Congress meant to protect the agency from the ebb and flow of politics and that its director should only be dismissed for cause.

"The director of the CFPB possesses more unilateral authority-that is, authority to take action on one's own, subject to no check-than any single commissioner or board member in any other independent agency in the USA government", Judge Brett Kavanaugh wrote for the majority. Wall Street interests, the banking and consumer finance industries and Republicans in Congress have fiercely opposed and criticized the agency, accusing it of overreaching in its regulation. English is now contesting that appointment in court.

"Even though I have total confidence in Acting Director Mulvaney's vision, the fact remains that no one person in America - especially someone who is unelected - should have the authority to unilaterally control whether working Americans can get a mortgage or a checking account", he continued. We thus uphold Congress' choice.

His resignation sparked a fight over who would serve as acting director until a permanent replacement is nominated by President Donald Trump and then confirmed by the Senate. In an unusual turn, the Trump Justice Department opposed the agency within its own government in the case and could be expected to appeal the latest decision.

The case itself isn't over: The Trump administration and PHH are likely to appeal the case up to the U.S. Supreme Court, according to a report in Bloomberg. A judge ruled in early January in favor of Trump and the White House, denying English an injunction to keep Mulvaney out of the job.

When Kavanaugh issued that opinion, the CFPB looked very different.

"The fact that there is a separate appeal on an expedited schedule makes it hard for Mulvaney [or the DOJ] to appeal to the Supreme Court without jeopardizing his credibility in the Leandra English case", said Jennifer Lee, a partner at Dorsey & Whitney.

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