Language in the Dodd-Frank Act that establishes the Consumer Financial Protection Bureau’s (CFPB) Independence from Congress is Constitutional, the U.S. Court of Appeals for the District of Colombia Circuit ruled Wednesday, overturning a 2016 Ruling by three of the Court's Judges.
In a review of the Court’s previous Decision in PHH vs. CFPB, the Full Panel held that the CFPB can exist as an Independent Agency with a Sole Director and only could be fired by the President for “inefficiency, neglect of duty, or malfeasance” without Violating the Constitution's Limits on Executive Power.
Judge Nina Pillard, who wrote the Court’s Opinion, cited the precedent set by Humphrey’s Executor v. United States, a 1935 Case reaffirming the Legality of the Federal Trade Commission’s Independent, Sole-Director Structure. “The Court approved the very means of independence Congress used here: protection of agency leadership from at-will removal by the President. The Court has since reaffirmed and built on that precedent, and Congress has embraced and relied on it in designing independent agencies,” Pillard wrote.
“We follow that precedent here to hold that the parallel provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act shielding the Director of the CFPB from removal without cause is consistent with Article II.”
The Full Court's 5-3 vote to Overturn the 2016 decision preserves the Structure of the CFPB as laid out in Dodd-Frank. The Opinion comes as Progressives and Conservatives clash over the future of the CFPB, now run by Office of Budget and Management Director Mick Mulvaney.
Mulvaney has taken several steps to reign in the CFPB's Regulation and Oversight of the Financial Sector, such as Reopening Rules treasured by Progressives and reviewing the Bureau's Investigative Practices.
Wednesday's ruling gives Mulvaney a clear path to continue reshaping the CFPB.
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