Legal

Supreme Court: President Has Authority To Fire CFPB Chief

Supreme-Court-Consumer-Financial-Protection-Agency

The U.S. Supreme Court has struck down a key feature of the Consumer Financial Protection Bureau (CFPB) that limited presidential authority to fire the agency’s chief. The bureau was one of the major regulatory reforms that followed the epic economic collapse of the Great Recession.

The ruling, in the case of Selia Law v. Consumer Financial Protection Bureau, had Chief Justice John Roberts casting the deciding vote with the rest of the court’s conservatives. His written opinion said the restrictions on the president’s authority on an executive branch agency were unconstitutional.

The creation of the CFPB in 2010, by now-U.S. Sen. Elizabeth Warren (D-Mass.), was one of the big battles after the financial crisis. As with other reforms passed in the wake of the economic disaster, the financial industry has had the agency in its sights ever since.

The election of Donald Trump in 2016 gave the industry a chance to attack the agency.

Between its inception and President Trump’s inauguration, the CFPB returned nearly $12 billion to defrauded consumers, according to the Huffington Post. That’s because it was protecting consumers by enforcing rules for the likes of payday lenders, banks and others.

With Trump’s election, the fight over the agency was on.

In 2017, for example, the CFPB had drafted payday lending rules under the tenure of Richard Cordray, who had served as the previous director of the agency.

The Obama-era appointee sought to put in place new underwriting requirements for lenders, such as verifying borrowers’ ability to repay the payday loans. The rules also had another component, focused on how often a lender can try to debit payments from a customer’s bank account.

In 2019, a new Trump appointee as CFBP director sought to eliminate some of the rules — such as the requirement for lenders to verify a borrower’s income, debt and spending habits to assess their borrowing threshold before underwriting their loan.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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