Consumer Watchdog’s Structure Ruled Unconstitutional

Photo by sergign / Shutterstock.com

In a 2-1 decision Tuesday, the U.S. Court of Appeals for the D.C. Circuit ruled that the structure of the Consumer Financial Protection Bureau is unconstitutional, but added that the agency can continue to operate under the president’s supervision.

The court’s ruling also sent back for review the CFPB’s enforcement action against mortgage lender PHH Corp. The CFPB had fined PHH for allegedly accepting kickbacks from mortgage insurers. The lender appealed the CFPB’s fine, which is what triggered the court’s review and ruling against the agency.

According to the federal appeals court, the consumer watchdog agency— which was created in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act — is in violation of the Constitution in that its sole director, Richard Cordray, has too much power because he can only be terminated by the president for cause instead of at will.

Writing in the court’s 110-page opinion, Judge Brett Kavanaugh says:

“That combination of power that is massive in scope, concentrated in a single person, and unaccountable to the President triggers the important constitutional question at issue in this case.”

The court says giving the president the power to get rid of the agency’s director at will and oversee and direct the head of the CFPB would remedy the situation.

CFPB spokesperson Moira Vahey says the agency “respectfully disagrees” with the court’s ruling. She continues in an email:

“Congress has charged the bureau with ensuring that the markets for consumer financial products and services are fair, transparent, and competitive and with protecting consumers in these markets from unlawful practices. Today’s decision will not dampen our efforts or affect our focus on the mission of the agency.”

According to The Wall Street Journal, allowing the president to remove the head of the CFPB at will “could make the CFPB a more political agency than it is now, because the White House would be able to exert more control over its direction.”

What do you think of the court’s ruling? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Most Popular
New Retirement Bill Would Help Savers of All Ages
New Retirement Bill Would Help Savers of All Ages

With bipartisan support, this bill could help millions of workers and retirees boost or conserve their retirement savings.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

3 Colors That Can Ruin Your Car’s Resale Value
3 Colors That Can Ruin Your Car’s Resale Value

Select the wrong color for your next car, and it could depreciate twice as fast as others.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

9 of the Best Things to Do When You Retire
9 of the Best Things to Do When You Retire

You’ve waited all your life for this moment. Make the most of your retirement.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.