A federal appellate court announced Thursday that it would review a decision finding that the structure of the Consumer Financial Protection Bureau is unconstitutional, temporarily undoing an earlier decision that said the president is allowed to fire the agency’s director at will.
The United States Court of Appeals for District of Columbia Circuit said that the full court would rehear the case, PHH Corporation, et al v. CFPB, which has major implications for the future of consumer financial regulation under the administration of President Trump. In October, a three-judge panel had ruled that the bureau’s single-director set-up was unconstitutional.
The bureau’s current director, Richard Cordray, is an Obama appointee who has advanced regulations opposed by Republicans. GOP members of Congress have called on Trump to fire and replace Cordray, as Trump could do at will if the previous ruling holds up.
Consumer advocate groups and allies of the bureau, a creation of the 2010 Dodd-Frank financial reform law, immediately praised the decision to review the case.
“It is disappointing but not surprising that payday lenders, debt collectors, for-profit colleges, and other powerful industry groups have turned to their allies in Congress and the courts in an effort to weaken the Bureau so they can keep exploiting financially vulnerable Americans,” said Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights. “The panel ruling against the Bureau was wrong on the law and wrong for consumers, and we are relieved that the full D.C. Circuit will take this opportunity to get it right.”
Oral hearings before the full court are set for May 24.
Richard Hunt, the head of the Consumer Bankers Association, said the decision to rehear the case “creates further uncertainty regarding the constitutionality of the CFPB.” He called on Congress and the Trump administration to overhaul the bureau through legislation.
