The Consumer Finance Protection Bureau (CFPB) is the brainchild of Senator Elizabeth Warren (D-MA) and one of the only entities in the nation that holds large financial institutions accountable for predatory anti-consumer practices.
The agency was created as part of the 2010 Dodd-Frank law, enacted after the recklessness of large banks crashed the economy. Naturally, Republicans want it abolished.
One of the arguments made against the CFPB is that its mission is “unconstitutional.” The agency is largely independent, with restrictions in the law that limit a sitting president’s ability to determine the director of the agency. Also, rather than getting funding through the appropriations process like many other federal agencies, the CFPB gets its funding directly from the Federal Reserve.
That puts it outside of the control of partisans in Congress, who could simply remove funding for the agency instead of abolishing it. In fact, Trump’s appointee to head the CFPB, Mick Mulvaney, is requesting $0 for the budget in order to accomplish exactly that.
Unfortunately for Republicans, a federal appeals court just ruled that the agency’s structure is, indeed, constitutional. POLITICO has more:
‘Wednesday’s decision involved a case brought by PHH Corp., a New Jersey mortgage service provider that the CFPB targeted for an enforcement action in 2015. PHH challenged the bureau’s leadership structure in court and initially won a ruling in its favor.
‘But the bureau’s appeal preserved its single-director leadership — as opposed to a bipartisan commission that some critics would prefer — before Cordray left to run for governor in Ohio.
‘Though the court ruled the CFPB structure is constitutional, it handed the industry a partial victory by rejecting the penalty that Cordray imposed on PHH. Cordray added more than $100 million to a fine recommended by an administrative law judge, and Wednesday’s ruling stayed his order for the company to pay a fine, pending review.’
This decision will likely affect another case set to come before the same appeals court. In November, the director of the agency stepped down, and picked his deputy, Leandra English, to run things. In the law that created the CFPB, the former deputy director is supposed to run the agency until a permanent director is nominated by the president and confirmed by the president.
Yet instead of following the law, Trump chose to nominate the White House Director of Management and Budget, Mick Mulvaney, to run the agency in the interim. That move immediately prompted a lawsuit by English, the goal of which is to stop Mulvaney’s agenda from being followed until a permanent director is nominated.
The decision today affirms that the CFPB is intended to be an independent agency, and may bode well for English’s lawsuit. POLITICO goes on to report,
‘For now, the fight over who should act as CFPB director remains.
‘Gupta argued that Wednesday’s ruling could hold implications for English’s case.
‘“It does have implications for the case, no question, because this is a resounding affirmation of the independence that Congress wanted for this agency,” he said. “The White House OMB director is effectively running the agency.”‘
The Trump administration wants to hobble the CFPB and let big banks do whatever they want to consumers with no oversight. Hopefully the victory today is followed by another.
Featured image via Mark Wilson/Getty Images