Regulation

CFPB Touts Structural Changes Won’t Impact Operations

The Trump administration’s Justice Department’s March 17 brief outlining the possible unconstitutional structure of the Consumer Financial Protection Bureau (CFPB) was met with some resistance from the organization.

Created during the Obama administration by the 2010 Dodd-Frank overhaul, the CFPB combined consumer protection functions under one roof.

The Republican party has had its sights set on the CFPB for quite some time due to its belief of regulatory overreach. To help defend itself ahead of the May 24 hearing, the CFPB is speaking out, saying that it will continue to operate business as usual no matter what structural changes may occur.

What sparked this Justice Department brief was an instance where the CFPB claimed New Jersey–based mortgage lender PHH Corporation accepted under-the-table money from mortgage insurers. As such, this would mean that PHH breached the Real Estate Settlement Procedures Act.

The CFPB’s lawyers shared a statement on this matter, saying, “Neither PHH nor the United States has provided any basis for distinguishing the Bureau from Supreme Court precedent upholding the constitutionality of independent agencies.”

Following a long and arduous legal process, the CFPB’s structure was ruled unconstitutional by a three-judge panel, but that verdict was negated four months later by the same court. In this decision, the judges also ruled the president can remove the CFPB’s director at any time.

In the brief, the Justice Department shared, “A single-headed independent agency presents a greater risk than a multi-member independent commission of taking actions or adopting policies inconsistent with the President’s executive policy.”

Leading up to the May court hearing, there are several groups, as well as 40 Congress members, in full support of CFPB. Members of Congress on the side of the CFPB include Senator Sherrod Brown of Ohio, the Democratic Party’s leader in the Senate Banking Committee; Representative Maxine Waters of California, the top Democrat on the House Financial Services Committee; and Senator Elizabeth Warren of Massachusetts, who was involved in developing the consumer bureau.

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