Authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (the "CFPB") is an agency of the United States government that regulates banks, credit unions, debt collectors, and many other sectors of the American financial services industry.
The United States Court of Appeals for the District of Columbia Circuit (the "D.C. Circuit") made headlines in October, 2016 when it ruled in PHH Corp. v. Consumer Financial Protection Bureau, 839 F.3d 1 (D.C. Cir. 2016), that the CFPB's single-director structure, which permits removal of the director only "for cause," was unconstitutional. On February 16, 2017, however, the D.C. Circuit took a relatively rare step when it granted the CFPB's petition for a rehearing en banc. While a panel of three judges heard the original case, all but two of the D.C. Circuit's judges participated in the May 24, 2017 rehearing.
In an opinion issued on January 31, 2018, and by a vote of 6-3, the full D.C. Circuit reversed course and upheld the constitutionality of the CFPB's single-director/for-cause management structure. Writing for the majority, Judge Nina Pillard concluded that "[a]pplying binding Supreme Court precedent, we see no constitutional defect in preventing the President from firing the CFPB Director without cause." Judge Pillard further reasoned that "Congress's decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will."
We anticipate that the U.S, Supreme Court may ultimately be called upon to decide constitutionality of the CFPB's structure. Fitch Law Partners will closely monitor developments as the issue unfolds.
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