The
D.C. Circuit Court found that the CFPB’s concentration of enormous power
in a single, unaccountable, unchecked Director is unconstitutional.
The U.S. Court of Appeals for the District of Columbia Circuit ruled today that the Consumer Financial Protection Bureau’s structure is unconstitutional because its director retains too much power. In its 110-page ruling in the case PHH Corporation, et al. v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL (D.C.Cir. Oct. 11, 2016), the court threw out the CFPB’s $109 million fine against PHH Corp., but said the bureau can continue to operate under the president’s supervision.
The case stemmed from a 2014 enforcement action in which the CFPB claimed that PHH Corp. violated the Real Estate Settlement Procedure Act by participating in a mortgage insurance kickback scheme for more than a decade. When the D.C. Circuit Court heard the case in April 2016, judges asked the CFPB’s lawyers to prepare to answer questions about the bureau’s leadership such as “What independent agencies now or historically have been headed by a single person?” and “If an independent agency headed by a single person violates Article II [of the Constitution] … what would the appropriate remedy be?”
The Consumer Financial Protection Bureau survived a constitutional challenge and will remain in business.
The U.S. Court of Appeals for the District of Columbia Circuit ruled today that the Consumer Financial Protection Bureau’s structure is unconstitutional because its director retains too much power. In its 110-page ruling in the case PHH Corporation, et al. v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL (D.C.Cir. Oct. 11, 2016), the court threw out the CFPB’s $109 million fine against PHH Corp., but said the bureau can continue to operate under the president’s supervision.
The case stemmed from a 2014 enforcement action in which the CFPB claimed that PHH Corp. violated the Real Estate Settlement Procedure Act by participating in a mortgage insurance kickback scheme for more than a decade. When the D.C. Circuit Court heard the case in April 2016, judges asked the CFPB’s lawyers to prepare to answer questions about the bureau’s leadership such as “What independent agencies now or historically have been headed by a single person?” and “If an independent agency headed by a single person violates Article II [of the Constitution] … what would the appropriate remedy be?”
The Consumer Financial Protection Bureau survived a constitutional challenge and will remain in business.
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