This week the U.S. Court of Appeals for the District of Columbia Circuit struck down provisions of the Consumer Finance Protection Bureau (CFPB) as being unconstitutional by saying that it gives too much power to the agency’s director. The decision was in response to lawsuit filed by mortgage lender PHH which had been the recipient of a $109 million enforcement action from the CFPB – which had amended an administration judge’s penalty of $6.4 million. Regarding constitutionality, the appeals court ruled that the law creating the CFPB violated the separation of powers clause and that the agency needs to be restructured with the director falling under the President – meaning he or she can removed at will, versus the current structure where they are, literally, accountable to no one. The CFPB was created as part of the sweeping Dodd-Frank legislation enacted in the aftermath of the 2008 financial crisis.
“This is a triumph for democratic accountability and thus individual liberty as envisioned by America’s founders. Writing for a three-judge panel of the D.C. Circuit Court of Appeals, Judge Brett Kavanaugh noted that under Article II of the Constitution “the President alone is responsible for exercising the executive power.” The President, unlike the many bureaucrats he oversees, must answer to voters” From The Wall Street Journal’s lead editorial, emphasis added.
“The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury,” the court said. The ruling also vacated a $109 million enforcement action against PHH, sending the case back to the CFPB for review.” As reported in The Washington Post.
Click here to read the U.S. Court of Appeals decision.
