Pressure on CFPB Intensifies: What’s Next for the Agency?

A three-judge panel from the U.S. Court of Appeals for the D.C. Circuit dealt a setback to the U.S. Consumer Financial Protection Bureau last week when it denied motions to intervene in a lawsuit on behalf of the agency.

The court is at the center of the legal battle challenging the structure of the agency and the independent nature of its director, who cannot be removed except for cause. In the controversial case, PHH Corp. v. CFPB, the same three-judge panel earlier ruled the agency’s structure unconstitutional and gave the president the power to remove the director at will.

In December, the CFPB asked the entire court to rehear the case; a decision on whether it will do so is expected soon.

Opponents of the CFPB aren’t waiting for that ruling to continue their assault, however. Sen. Ben Sasse, R-Neb., this week repeated his call for President Trump to fire Cordray in an opinion piece published in USA Today. He had made the same request in January, calling the director’s removal the “first marker in the long process of rolling-back” the agency.

A group of seven Republicans also introduced a joint resolution last week to repeal the CFPB’s Prepaid Access Rule.

However, most of the actions taken by the Trump administration and the Republican Congress regarding financial regulation have so far not impacted the CFPB directly.

On Friday, President Trump signed an executive order that outlined a set of guiding principles for financial regulation and directed the Treasury Department to report back to him regarding any “laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other Government policies that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.”

While the order was widely interpreted as taking aim at Dodd-Frank, it does not mention the law by name, nor does it mention the CFPB.

In the PHH case, three parties had filed motions with the Court asking to submit briefs in support of the agency. One of the motions was filed by attorneys general from 16 states and the District of Columbia. The second was filed by Sen. Sherrod Brown, D-Ohio, and Rep. Maxine Waters, D-Calif., and the third by a group of public interest groups including the Center for Responsible Lending and Americans for Financial Reform.

All three of the motions cited doubt that the current administration would defend its agency as the reason for their requests to intervene.

In their motion, attorneys for Brown and Waters had argued that Congress purposely structured the agency the way they did to maintain its independence.

“By nullifying the removal protections for the Director provided for in Dodd-Frank, and thus transforming the CFPB into an executive agency subject to the policy direction of the President, the panel decision fundamentally altered the Bureau and hindered its ability to play the role that Congress intended,” the motion read.

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