Consumer Financial Protection Bureau

CFPB Is Constitutional, Court Rules, in Victory for Unaccountable Bureaucrats Everywhere

The D.C. Circuit says the structure of the Consumer Financial Protection Bureau is OK.

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JOSHUA ROBERTS/REUTERS/Newscom

The structure of the Consumer Financial Protection Bureau (CFPB) was ruled constitutional today.

Unlike other independent agencies not under the direct supervision of Congress or the president, the CFPB was given a single director instead of a panel of three or five commissioners. In theory, that was meant to insulate the bureau from political influence. In practice, it made the director one of the most powerful people in the federal government. Last year, a three-judge panel on the D.C. Circuit Court ruled the CFPB's structure was unconstitutional, but the bureau was allowed to continue operating while the case was appealed to the full court.

The en banc panel of the court upheld the CFPB's structure in a split decision issued today. In reversing the earlier ruling, the court accepted the argument that Congress could create a uniquely structured agency as a way to shield the bureau from political influence.

"Congress's decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will," Judge Cornelia Pillard wrote for the majority.

Although the court upheld the CFPB's structure, it tossed out penalties that the CFPB had issued to PHH Corp., a mortgage services firm and the plaintiff in the case.

This ruling might not be the last word on the CFPB. Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, thinks the Supreme Court should take the case. The D.C. Circuit ruling was disappointing but not surprising, Shapiro says, because the court has a history of being deferential to the government's case.

"The director of the CFPB reports to no one but himself, and, under the terms of Dodd-Frank, can be removed by the president only for cause," says Shapiro. "This structure violates core principles of separation of powers and allows the agency to exist unfettered by any accountability to the people."

The degree of control the president can exert over the CFPB remains an open question. Earlier this year, after Richard Courdray stepped down as director to run for governor of Ohio, there was a week-long legal spat over whether Donald Trump had the authority to appoint a new director to the agency or whether Courdray's second-in-command would take over. Trump's pick, Mick Mulvaney, prevailed in the end.

As long as Mulvaney—a longtime critic of the CFPB dating back to his time in Congress—is in charge, the CFPB is likely to take a more limited view of its role as chief enforcer of the rules Congress passed after the 2008 financial collapse. Still, the constitutional question at the heart of the case will remain important for the long term. In just a few short years, the CFPB enforced regulations against mortgage brokers and powerful Wall Street banks but also used its unaccountable power to target small businesses, including payday lenders and community banks.

In the earlier ruling that went against the CFPB, Judge Brett Kavanaugh wrote that "other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power."

Today's ruling gives future heads of the CFPB license to wield that power with little restraint, says Iain Murray, vice president at the Competitive Enterprise Institute. Murray's group has filed its own constitutional challenge against the CFPB.

"This outrage to the spirit of the Constitution needs to be corrected by the Supreme Court and by Congress, which made the original mistake in giving the CFPB so much power with so little accountability," says Murray.

NEXT: Addicts Use Imodium to Help With Detox. That's a Terrible Reason for the FDA to Make It Harder to Get.

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  1. Huh. I wondered why Richard Cordray’s official portrait was just a fiery eye on top of a dark tower.

    1. Not to be confused with Rob Corddry, whose official portrait will soon be everywhere, once he spills his Chernobly drink all over the hot tub.

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  2. OT:

    RIP Oscar Charles Gamble. He was only 68.

    1. Legendary afro.

  3. You damn near made me choke since I assumed this was the Supreme Court decision.

    1. Nah, just a 6-4 decision by a left leaning Court of Appeals.

    2. Yeah. But it’s still an ass decision. And it means that the CFPB can STEVE SMITH anybody it wants to unless the Supreme Court takes on the case and spanks the CFPB like BUCS on a weekday.

      1. Wait …. is BUCS the giver or receiver or these “weekday spankings”?

        …asking for a friend.

  4. Consumer Financial Protection

    VERBOTEN!

    Says the Trumpen-Fuhrer.

    1. When was the last time a government agency lived up to its name?

      1. The CFPB is certainly a Bureau, so the name is at least 25% accurate.

        1. If they only stuck to being a chest of drawers, we could all sleep soundly, and they could make money housing Japanese tourists.

        2. If there was a Department of Waste, or Bureau of Misallocated Resources, then I imagine they would accomplish their stated goal.

          1. clearly not reading the micro printing on the enabling legislation…they all lay claim to that title.

        3. Just to prove the rule, outside critics have, in fact, deemed it an armoire.

      2. September 18,1947. After that, the Department of War was renamed the Department of Defense.

    2. All Troo Librutarians know that government agencies and acts do exactly as their title says.

      1. Since we have a fucked up system where the federal government BUYS mortgages and bundles them into securities to sell to private markets – we need a CFPB to insure those mortgages are credit worthy (conforming).

        Look what happened when we didn’t hate a CFPB (2007-08). Fuck, cheating the government was too EASY.

        Now, if you want to shitcan the GSEs and the whole mortgage apparatus of today then let’s do it. But until we do the CFPB is a VERY low cost proof-reader of sorts.

        1. Is that what you think they are doing?

          1. Hey, is PB saying that Fannie Mae DID have a big problem?

            The Left tends to get angry when that gets mentioned.

            1. They were a huge problem.

              And I am not of the left. I hate progressives and conservatives. But mostly I hate religion and Islam is the worst.

              1. And what exactly do you think the CFPB is doing about Fannie Mae?

                Was it the prohibition of mandatory arbitration agreements in consumer agreements? The proposed rules limiting the collection of valid debts?

                They aren’t the OCC?the safety and soundness of the financial system isn’t their focus. They are focused on “preventing banks from doing things people don’t like.”

                1. Since we have a fucked up system where the federal government BUYS mortgages and bundles them into securities to sell to private markets – we need a CFPB to insure those mortgages are credit worthy (conforming).

                  Look what happened when we didn’t hate a CFPB (2007-08). Fuck, cheating the government was too EASY.

                  Now, if you want to shitcan the GSEs and the whole mortgage apparatus of today then let’s do it. But until we do the CFPB is a VERY low cost proof-reader of sorts.

                  (From earlier)

                  1. I’m aware. That statement shows you know fuck all about what the CFPB actually does. Doubling down on it doesn’t make it any more correct.

                    1. Here is the examination procedure for mortgages:

                      https://goo.gl/AmhV2x

                      You should read up on the mortgage meltdown of the mid to late 2000s.

                    2. I’m aware. This is what I do for a living. They used the mortgage crisis to get Warren’s consumers protection brainchild through?and they paid some lip service to preventing another crisis (the ability to repay rules come to mind).

                      But the vast majority of their regulatory focus is on shit they deem to be “unfair”?not motivated by a desire to preserve the safety and soundness of the financial system. Again, that’s the OCC.

                    3. I work at a bank. The CFPB is a clusterfuck trying to justify it’s existence.

                    4. Turd claims to have ‘worked in finance’.
                      I’m pretty certain that means he emptied the trash after the office closed. His claims, predictions and general dishonesty suggests nothing else.
                      Right turd? RIGHT?

        2. “But until we do the CFPB is a VERY low cost proof-reader of sorts.”

          One born every minute, somebody said.

        3. A government agency to watch a government agency… I like the way you think.

          1. I’m pretty sure no thinking is or was every involved…

        4. As someone who was working in mortgage law (including closely with the GSEs) during the CFPB’s rollout, i can confidently say that you have no idea what you’re talking about.

        5. No, retard, the CFPB primarily targets private label MBSs, not GSE ones. If anything they go easy on GSE securities; GSEs don’t justify the CFBP by a long shot. For fucks sake they’re trying to regulate auto insurance. You’d probably come up with some half assed rationalization for the enabling act of a Democrat proposed it, wouldn’t you.

    3. Yup, and the Dept of Justice ONLY seeks justice and nothing else….

      1. Of course they always do, when they get to define justice, and redefine the terms to make it so.

    4. “Trumpen-Fuhrer.”

      Third-grade kids nationwide are howling with laughter.

    5. …and says anyone who doesn’t want a centrally planned economy.

  5. I understand tbst politics is a messy ugly business, but you cannot have a government by and for the people without it. Putting an agency of government completely beyond the purview of politics is both a fool’s quest and a highly dangerous notion. If something should be beyond the reach of politics, then it shoukd not be done by government at all.

    1. Yet that is exactly what was done with the Federal Reserve. Keep the fucking morons in Congress out of the central bank for good.

      The CFPB is part of the Fed anyway.

      1. Can the Reserve remove the head?

        The answer, presently, is no.

        So, in what way is it “part” of the Fed?

        1. Congress should fund CFPB, not Fed: Mnuchin

          By Matthew Wisner Published June 13, 2017 White House FOXBusiness Opens a New Window.

          The Fed funds the CFPB – not taxpayers.

          1. Can they remove the head of the CFPB? It is not exactly a complicated question.

            1. You answered your own question.

              I answered the one you didn’t already know the answer to.

              1. So, again, how is it “part” of the Fed if nobody on the Fed can remove the head?

                You can argue it is “part” of the Executive Branch more readily and even that is not accurate.

                1. It is not part of the Fed. It is funded through the Fed. It receives a fixed percentage of the budget that Congress allocates to the Fed. But it is not under the control or oversight of the Fed.

      2. The CFPB isn’t a central bank, Idiot. There’s no more reason it should be part of the fed than the military or the DEA. Moreover, the fed chair is answerable to board of governors, while the head of the CFPB is not. And given that the Fed causes more recessions than it prevents, why do you live the current system so much?

  6. Well, I wouldn’t count this out just yet. The DC is the only federal appellate court with a worse record of being overturned than the 9th Circuit.

  7. I don’t see a need for the CFPB. TILA (Truth in Lending Act) has been on the books since 1968.

    1. And you have never read a 2-page credit application either.

      “Truth” isn’t the problem. They bury the “truth” in 15,000 words of legal mumbo-jumbo.

      1. And “consumer protection” is buried in an unaccountable bureaucratic agency.

        1. By unaccountable you mean not subject to immediate gutting at the hands of donor-dependent politicians. Which was kind of the point.

          Congress retains the same legislative power that created it, though.

          1. Yes, because Cordray was the epitome of a totally non-partisan public servant.

            Perhaps if the first chief didn’t try to turn it into his personal monarchy, it’d be less of a concern…

            1. Yeah, he attempted to literally turn it into a situation where only the outgoing head had the authority to dictate a successor. Pray tell what happens if the current head dies? Does the agency die too?

              Inquiring Romanov’s want to know.

          2. You mean ‘elected’.

            My god, could you be any more of a hypcritical, incoherent douche bag? You bitch about the electoral college being undemocratic, but the moment you find a bureaucrat you agree with, elected politicians are now ‘donor-controlled.’

            You’re just embarrassing yourself.

            1. “My god, could you be any more of a hypcritical, incoherent douche bag?”
              Given Tony’s total incapacity for self knowledge, yes. Yes, Tony has not yet plumbed the depths of that and more.

          3. And why not make the whole government like that? Why should any agency be answerable to elected officials? If they’re just pawns of ‘donors’ (never mind that how badly the 2016 election disproved that), why have elections at all.

            Just admit that you don’t value democracy in the slightest. What you want is a monarch who shares your values to impose them on everyone else, and you’ll take what’s as close to that as you can get.

      2. It’s not everyone elsr’s fault you’re to dumb to read more than 2 pages and sign six figure contracts without reading them.

  8. “Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,”

    So is “civil regulation of consumer financial protection” a special area of government wherein the legislature can mandate the execution of the law be removed from the will of the, um, executive, or can this reasoning be used as a blank check to hand out supra-constitutional powers to all manner of czars?

    1. I just can’t get over that “permissible judgment” that some things are too important to be left to the execution of the executive. The fucking Constitution says the executive power belongs solely to the executive. It’s called “separation of powers” and it’s the whole fucking backbone of American governance, you twat-waffles.

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  9. What lack of accountability? Congress can always change it.

    1. Congress didn’t have the actual authority to enact it.

        1. The constitution. Ya know, like how it says Congress can’t have you executed for no reason at all. Just because someone says something is legal doesn’t mean it is.

          1. Unless it’s at least 5 members of the Supreme Court.

  10. “Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,”

    What if congress decided that our nuclear arsenal should be kept one step removed from political winds and presidential will and put a guy in charge that can’t be fired during a specified term? Would that be O.K.? Or does the constitution just favor consumer protection for some reason.

  11. “Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,” Judge Cornelia Pillard

    Progressivism in a nutshell. Rule of an apparatchik class, “removed from political winds” – totally unaccountable to voters.

  12. It’s all part of the “lenders caused the housing bubble!” smokescreen.

    1. We need a scapegoat to save the Fed from having to admit it learned nothing from the Great Depression.

      1. something… something….. phony, baloney jobs
        Mel Brooks

  13. “The only way we can protect against corruption is despotism.” This week on why the West is dismantling itself.

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