Consumer Financial Protection Bureau Director Richard Cordray.

Consumer protection group petitions for rehearing 

Last week, the Consumer Financial Protection Bureau (CFPB) filed a petition with the Court of Appeals for the District of Columbia Circuit asking for a rehearing in the case of PHH Corp v. Consumer Financial Protection.

Back on Oct. 11, the Court of Appeals ruled that the CFPB’s single director structure — currently helmed by Director Richard Cordray — was unconstitutional.

The ruling fueled discussion from both sides about the future of the CFPB — which was established in 2011 by the created by the Dodd-Frank Wall Street reform law to reign in the financial services industry in response to the crisis in 2008. It was designed to combat “unfair, deceptive, or abusive acts and practices” of banks and credit unions and keeps an eye on mortgage servicers, payday lenders, and debt collectors.

The ruling by the three-person panel of judges stated, “the Director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President. … In light of the consistent historical practice under which independent agencies have been headed by multiple commissioners or board members, and in light of the threat to individual liberty posed by a single-Director independent agency … we hold that the CFPB is unconstitutionally structured.”

The ruling was seen as good news for Republicans who want to make significant changes to the Dodd-Frank Act and President-elect Donald Trump who has many times mentioned his intention of removing Cordray. If the ruling stands, Trump could relieve Cordray of his job upon taking office without cause.

Democrats are committed to preserving the CFPB which has been busy in recent months, only recently handing down a $100 million fine to Wells Fargo in the wake of the bank’s unauthorized account-opening scandal. They say removing Cordray, confirming a new director or establishing a committee to replace a director role altogether will ultimately bog down the consumer protection effort.

According to insideARM: “There has also been significant discussion in the press that rulemaking on Mandatory Arbitration and Pay Day lending may be in jeopardy with the change in administration and GOP control of Congress. Additionally, debt collection rulemaking may be slowed and influenced by a different director. … Reducing consumer protections is not a popular platform.”