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Federal Courts Rule the CFPB’s Structure Unconstitutional


8213432552_d4d9b72269_oA minor change in the wording to the law that created the Consumer Financial Protection Bureau (CFPB) will ensure that it is no longer in violation of the Constitution.    Last Tuesday, a federal appeals court, comprised of judges nominated by Republican presidents, found that the Bureau’s structure gave too much power to a single director.

At its inception after the 2008-09 housing crisis, the law indicated that the CFPB director could only be removed “for cause”.   By taking out the “for cause” wording, the courts have given “the president the power to remove the director at will, and to supervise him or her”, according to an article published in The Washington Post by Marcy Gordon and Sam Hananel.

“It’s important to recognize the remedy the court outlines still allows the CFPB to continue to operate,” Maria Earley, CFPB enforcement attorney, said.  Nevertheless, the banking industry, who has accused the CFPB of being too involved and over-regulating the industry, is viewing this ruling favorably.  Consumer groups, on the other hand, feel that the power of the CFPB has been weakened by this decision.

This case could be subject to a rehearing of the decision by the full appeals court, comprised of judges appointed by Democratic presidents, if requested by the current administration.

Read the entire article.