The U.S. Court of Appeals for the District of Columbia found Tuesday that the setup of the Consumer Financial Protection Bureau, which is led by a single director, Richard Cordray, is not in line with other independent agencies, which are typically run by a group of commissioners, and is therefore unconstitutional.
The decision was a response to a petition from mortgage lender PHH, which challenged an enforcement action from the agency and called for the CFPB to be eliminated.
But the court decided against shutting down the CFPB, instead ordering that the agency be restructured so that the director could be removed by the president at will. Currently, the director can only be removed with cause — a system that Judge Brett Kavanaugh said lacked checks and balances, according to the Washington Post.
“The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury,” the court said. The ruling also vacated a $109 million enforcement action against PHH, sending the case back to the CFPB for review.
The ruling comes as Republican lawmakers and financial groups are upping their efforts to weaken or dismantle the agency, which was created as part of the 2010 Dodd-Frank financial reform law. Conservative lawmakers have criticized CFPB Director Richard Cordray and staunchly opposed various rules and enforcement actions issued recently by the agency.
The RV Dealers Association earlier this year urged dealers to ask their U.S. senators to vote for S.B. 2663, the “Reforming CFPB Indirect Auto Financing Guidance Act”.