On January 31, 2018, the U.S. Court of Appeals for the D.C. Circuit upheld a federal statute curbing the President’s power to fire the director of the Consumer Financial Protection Bureau (“CFPB”), a financial regulator with the mandate to enforce federal consumer protection laws. In a 7-3 en banc decision, the Court held that it is constitutional for the CFPB director to be appointed to a five-year term, removable by the President only for “inefficiency, neglect of duty, or malfeasance in office.” At the same time, however, the Court affirmed the vacature of a $109 million sanction levied by former CFPB director Richard Cordray against PHH Corporation (“PHH”), a large mortgage lender.
As a result of the Court’s decision, the enforcement action will be remanded back to the CFPB, now under the leadership of Trump Administration-appointee Mick Mulvaney. The remand comes at a time of substantial uncertainty as to the CFPB’s enforcement prerogatives. In a leaked email to the entire CFPB staff on January 23, 2018, Mulvaney indicated that the CFPB would no longer “push the envelope” when it comes to enforcing consumer protection laws, and would instead be reviewing “everything that [it] do[es], from investigations to lawsuits and everything in between.” Indeed, the CFPB has since issued several Requests for Information to encourage public comment as it reviews its policies and processes related to enforcement and civil investigative demands.
Continue Reading D.C. Circuit Rules CFPB’s Structure Constitutional but Vacates $109 Million Enforcement Award