The U.S. Court of Appeals for the D.C. Circuit overturned an October 2016 court ruling that said the structure of the Consumer Financial Protection Bureau (CFPB) was unconstitutional.
The CFPB, established in 2010 as part of the Dodd-Frank Act, has a single director, which had been Richard Cordray until he resigned in December of last year. Mick Mulvaney was appointed by President Donald Trump to serve as acting director.
The single director governance structure was established to make the body independent and protected from influence. It’s similar to the structure of the Office of the Comptroller of the Currency and Federal Housing Finance Agency. Within this structure, the president has limited power to remove the CFPB director. The director can only be removed by the president “for cause” not “at will.”
Congressional Republicans argued that it was unconstitutional. Rep. Deb Fischer (R-NE) introduced a bill in the House last year to change the structure of the CFPB to a five-member commission.
The court said this week that the president’s limited ability to remove the director is not unconstitutional. This overturns an October 2016 decision in PHH Corporation vs the CFPB when the D.C. Circuit said the structure was unconstitutional. The CFPB disagreed with the decision and filed for an en banc review.
Rep. Jeb Hensarling (R-TX), who serves as chairman of the Financial Services Committee, disagrees with the decision to overturn the October decision.
“I am deeply disappointed with the court’s decision and hope the Supreme Court will review the ruling in short order,” Hensarling said. “In the meantime, I take great solace in the fact that Mick Mulvaney can use his unchecked, unilateral powers to continue the agency’s transformation into one that will, as he said, “exercise [its] statutory authority to enforce the laws of this nation….execute the statutory mandate of the bureau to protect consumers’ and go no further.”
In the bill he drafted, the Financial Choice Act, Hensarling called for the CFPB to be changed to the Consumer Law Enforcement Agency. It also says the director could be removed at will by the president.
“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,” Hensarling said. “The Bureau’s consumer protection mission is important, but no government agency – no matter how well-intentioned – should be able to evade common sense checks and balances that are necessary for accountability.”