The constitutionality of the Consumer Financial Protection Bureau and its structure with a single director has been upheld by the nation's second-highest court.
The D.C. Circuit Court of Appeals ruled, 7-3, that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the CFPB director during his or her 5-year term does not violate the president’s authority to appoint and remove executive branch officers.
The ruling was largely along ideological lines, with one George W. Bush appointee joining all the Democratic-appointed judges in upholding the CFPB’s structure. The three dissenting judges were all Republican appointees.
That en banc decision overturns a ruling by a previous three-judge panel on the court that found the structure of the CFPB was unconstitutional. Back in May, the court heard the CFPB's appeal.
The key issue is whether it’s constitutional for the CFPB, an independent agency created by the 2010 Dodd-Frank law, to be led by a single person.
In the 2-1 ruling from October, all three judges were appointed by Republicans. Of the 11 judges who heard Wednesday's arguments, six were appointed by Republicans.
PHH Corporation, a New Jersey mortgage lender that took the consumer bureau to court after it was fined $109 million for allegedly accepting kickbacks from mortgage insurers, says the answer is no. It argued Wednesday that the structure of the agency diminishes the president's power under Article II of the Constitution to faithfully execute the laws.
This is big, as far as it goes. PHH could of course appeal to the Supreme Court, but might not bother as Trump has pretty much quashed any independence of the Bureau by installing Mick Mulvaney, the Freedom Caucus maniac who became first Office of Management and Budget Director, as part-time CFPB director. Mulvaney's intentions for it have been made crystal clear—he requested $0 in funding for its operations for the quarter.
The D.C. Circuit has expedited consideration of a second case regarding the CFPB: Mulvaney's appointment. Before the former director, Richard Cordray, left the agency in November he promoted Leandra English from chief of staff to deputy director. As deputy, she would become the acting director according to the succession rules laid out in the statute creating the Bureau, which Trump ignored by installing Mulvaney. Presumably, any further appeal from PHH will depend on the outcome of the English-Mulvaney case.