CFPB 'Here to Stay' After DC Appeals Court Ruling

Mick Mulvaney director of the Consumer Financial Protection Bureau is trying to dismantle regulations protecting borrowers from payday lenders

PHH Corp. v. CFPB stemmed at root from the bureau's absolute lack of accountability.

The agency had been headed by Richard Cordray, who stepped down late a year ago and is now running as a Democrat for OH governor.

Finally, the majority held that the functions of the CFPB and its Director, unlike, for example, the Secretary of State or another Cabinet officer, are not core executive functions, and financial and consumer protection regulators have always been afforded a degree of independence, citing the FTC, the Federal Reserve, the FDIC, and others as examples. "Independence has always been associated with financial regulators with wide latitude to oversee and steady financial markets and the national economy", the ruling says.

A federal appeals court has handed a victory to the government's beleaguered consumer finance watchdog agency, ruling that its director's power isn't excessive and the president shouldn't have freer rein to fire that person.

Unlike the CFPB, other independent agencies, such as the Securities and Exchange Commission and Federal Communications Commission, are controlled by bi-partisan panels.

The court said the CFPB had violated due process by not providing PHH with notice of its new interpretation of Respa.

The court said Cordray erred in redefining the Real Estate Settlement Procedures Act to take action against PHH, an issue that had been largely overlooked by the case's more controversial constitutional issues.

"I am deeply disappointed with the court's decision and hope the Supreme Court will review the ruling in short order", Hensarling said in a press release.

The CFPB, an independent banking regulator that has taken on Wall Street abuses and protected American consumers, is one of the most vital tools created to get our economy back on track. Wall Street interests, the banking and consumer finance industries and Republicans in Congress have fiercely opposed and criticized the agency, accusing it of overreaching in its regulation. "We thus uphold Congress' choice", Judge Nina Pillard wrote for the court.

"While the court ruled the CFPB's governing structure was not unconstitutional, it does not mean the current structure is appropriate for the bureau's long-term credibility", said Richard Hunt, president and CEO of the Consumer Bankers Association.

But now, under Trump, the head of the agency has been appointed by a president who is actively hostile to the stated mission of the CFPB.

Pillard's ruling deals a blow to the Trump administration, whose Justice Department met the decision with noted disappointment today.

The case itself isn't over: The Trump administration and PHH are likely to appeal the case up to the U.S. Supreme Court, according to a report in Bloomberg.

Trump appointed Mulvaney as acting director of the CFPB on the same day, citing his authority under the Federal Vacancies Reform Act.

A district court judge denied granting English a temporary restraining order in December against Mulvaney, and she appealed.

The ongoing controversy and years-long court case has also touched the reverse mortgage industry, with Ocwen Financial Corporation (NYSE: OCN) last year requesting an early ruling on the case.

When Kavanaugh issued that opinion, the CFPB looked very different.

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