CFPB Fate In The Hands Of Appeals Court

The Consumer Financial Protection Bureau (CFPB) and its director Richard Cordray’s fate lies in the hands of an appeals court that will hear oral arguments on Wednesday (May 24) in a case between the CFPB and lender and loan servicer PHH Corp.

According to a report, the outcome could be months away, but whatever the appeals court has to say could provide firepower for one side over the other. On one side are Democrats, who defend the CFPB, which was the idea of Massachusetts Senator Elizabeth Warren. On the other side are Republicans, who have major issues with the government watchdog, arguing it overlooks economic activity by burdening the lenders with a lot of red tape.

Since the election of President Donald Trump, the Republicans have been picking up their attacks on the CFPB and Cordray over language that prevents him from being fired without cause. The single director structure has prompted the lawsuit with PHH, which contends it is unconstitutional.

“The CFPB has the weaker hand right now,’’ said Adam White, who studies financial regulation and law at the Hoover Institution, a conservative think tank, in an interview with Bloomberg News. “If they lose any aspect of this case, Cordray is really in trouble. And no matter what, this case will continue to energize Congress.’’ The report noted the appeals court could call for the disbandment of the CFPB.

Meanwhile, the Trump White House has said it wants the ability to fire Cordray any time for any reason but doesn’t think the CFPB should be closed down. The report noted that in Trump’s budget announced on Tuesday (May 23) it calls for the oversight of the CFPB to be moved to the Congress from the Federal Reserve, which it says will save the federal government $6.8 billion over the course of a decade.