CFPB Requests Limited Fix if Court Finds Constitutional Defect

By Rob Tricchinelli

The Consumer Financial Protection Bureau again defended the constitutionality of its structure to a federal appeals court March 31 but also advocated for a limited fix if the court agrees with an earlier panel’s decision finding it unconstitutional ( PHH Corp. v. Cons. Fin. Protection Bureau, D.C. Cir., 15-1177, 3/31/17 ).

“If this Court determines that the Bureau’s structure is unconstitutional, it should sever the for-cause removal provision,” the CFPB said. Such a decision would preserve the bureau’s single-director structure but allow for that director to be removed at will by the president. The bureau would prefer keeping the for-cause removal provision intact.

In October, a panel of the U.S. Court of Appeals for the District of Columbia Circuit said the bureau’s leadership structure violates the constitution, which the CFPB is now appealing to the full circuit court. The Dodd-Frank Act provisions at stake limit the president’s ability to remove the CFPB director “for cause” only.

The CFPB’s future operations depend heavily on the outcome of the case, as does the future of Director Richard Cordray, an Obama appointee whose term doesn’t end until 2018. Cordray has said he plans to serve out his term.

PHH Corp., the New Jersey mortgage firm suing the CFPB, has asked the court to “strike down the CFPB in its entirety.” The Trump administration argued in a separate brief that severing part of the statute is the proper remedy.

March 31 was also the deadline for “friends of the court” to file on behalf of the bureau. Among the bureau’s supporters filing briefs were a group of current and former members of Congress, including Senate Democratic Leader Charles Schumer (N.Y.), House Democratic Leader Nancy Pelosi (Calif.), as well as former Sen. Christopher Dodd (D-Conn.) and former Rep. Barney Frank (D-Mass.), authors of the 2010 law that created the CFPB.

To contact the reporter on this story: Rob Tricchinelli in Washington at

To contact the editor responsible for this story: Michael Ferullo at

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