Congressional Democrats filed an amicus brief with a federal appeals court in support of the Consumer Financial Protection Bureau’s current structure as an independent agency and its constitutionality.
The brief was filed after a D.C. Circuit Court granted the CFPB’s petition for rehearing en banc in a case related to PHH Mortgage Corp. Last October the U.S. Court of Appeals for the District of Columbia Circuit declared the CFPB’s leadership structure unconstitutional and vacated a $103 million fine against PHH. Specifically, the court ruled that the “for cause” removal provision for the director was unconstitutional.
The Feb. 27 order vacates the October 2016 judgment, sets a briefing schedule, and establishes May 24, 2017 as the date for oral argument. The question at hand is whether the CFPB’s structure as a single-director independent agency consistent with Article II of the Constitution.
The amicus brief, signed by 40 Democratic members of Congress, outlines how Congress decided after the 2008 financial crisis to design the CFPB as an independent agency with a single director to protect consumers’ interests and respond quickly to changes in the marketplace. The brief also emphasizes that Congress placed numerous checks on the director’s powers to ensure accountability. They argue that the text and history of the Constitution, along with decades of Supreme Court precedent, make clear that the CFPB’s leadership structure is constitutional.
“After extensively studying the roots of this crisis … Congress established a consolidated federal agency, the Consumer Financial Protection Bureau, with the sole mission of protecting Americans from harmful practices of the financial services industry,” the lawmakers wrote. “In creating the bureau, lawmakers determined that it needed two key attributes to fulfill its mission: independence, and the ability to act promptly and decisively in response to new threats to consumers.”
They say the CFPB’s single-director leadership is similar to the governance structure of the Office of the Comptroller of the Currency and Federal Housing Finance Agency.
“Congress created the CFPB to serve as a strong, independent cop on the beat to protect consumers from the kind of financial fraud and abuse that caused the Great Recession,” said U.S. Sen. Sherrod Brown (D-OH), ranking member of the Senate Committee on Banking, Housing, and Urban Affairs.
“Stripping the bureau of its independence would give the special interests their wish to incapacitate the agency, leaving consumers at the mercy of predatory lenders. Instead of weakening the CFPB and gutting Wall Street reforms, Congress should be working to rebuild our infrastructure, put more people to work, and strengthen consumer protections,” Brown added.