Monday, 24 September, 2018

Consumer watchdog agency gets appeals court win

Comments will open on CFPB's administrative hearing process Consumer watchdog agency gets appeals court win
Nellie Chapman | 01 February, 2018, 05:27

The Consumer Financial Protection Bureau regained a measure of independence when a USA appeals court said the president's power to remove the agency's head is limited to specific reasons such as neglect of duty or malfeasance in office. Mulvaney, taking on the second role, has moved to soften agency regulations on payday loans and slash its funding.

Wednesday's ruling overturns a November 2016 decision that had given presidents the power of dismissal over a CFPB director and marks the latest development in a complicated fight over leadership of the agency, which was established to crack down on predatory financial practices after the 2007-2009 financial crisis.

The court also made it very clear that the CFPB is subject to RESPA's three-year statute of limitations, regardless of whether it brings its case through an administrative action or through court. A judge ruled in early January in favor of Trump and the White House, denying English an injunction to keep Mulvaney out of the job.

The original ruling by a three-judge panel on the D.C. Circuit Court threatened to upend the CFPB, which was created as part of the 2010 Dodd-Frank financial reform law.

Consumer groups and Democratic lawmakers exulted in the ruling Wednesday.

At the same time, Hensarling said, "I take great solace in the fact that Mick Mulvaney can use his unchecked, unilateral powers to continue the agency's transformation". They wanted President Trump to be able to fire the director for whatever reason he wanted.

The bureau appealed that ruling to the full court with the backing of the Obama administration, which had strongly supported the agency. "If PHH does appeal the decision on the CFPB's constitutionality, it will be interesting to see if the Justice Department still agrees that the director should be removable at will, considering the new permanent director will be appointed by the Trump administration and have a term that lasts through the next, and possibly different administration".

The agency had been headed by Richard Cordray, who stepped down late a year ago and is now running as a Democrat for OH governor.

By a vote of 7-3, the U.S. Court of Appeals for the District of Columbia ruled that Congress acted appropriately when it set up the bureau with a single director who could only be removed by the president for inefficiency, malfeasance in office or neglect of duty, and not for political reasons. Wall Street interests, the banking and consumer finance industries and Republicans in Congress have fiercely opposed and criticized the agency, accusing it of overreaching in its regulation. Much to talk about here, more than can be said in a quick Twitter feed. It has handled over a million complaints from consumers.