Consumer Law

DOJ files brief in opposition to CFPB's leadership structure

  • Print.


In a near-unprecedented move, the Department of Justice has filed a brief in opposition to another federal agency, the Consumer Financial Protection Bureau, arguing that the CFPB’s structure is unconstitutional.

According to a Friday story on the New York Times’ Dealbook blog, the Justice Department filed its brief with the U.S. Court of Appeals for the District of Columbia Circuit in the ongoing lawsuit concerning the CFPB’s leadership structure. A three-judge panel from the D.C. Circuit had ruled in October that the president should be allowed to remove the head of the CFPB, currently Richard Cordray, at will. Under the CFPB’s current leadership structure, the head serves a fixed five year term and can only be removed prematurely for “inefficiency, neglect of duty or malfeasance.”

The lawsuit, which was originally filed by PHH Corp. after it was fined $109 million by the CFPB over alleged illegal kickbacks, sought to have the entire agency shut down by arguing that its constitutional structure was so deficient that the only remedy was to abolish it. The DOJ stopped short of that position, arguing that while being unable to remove the head of the agency at will was “an unwarranted limitation on the president’s executive power,” there was “no evidence that Congress would have preferred no bureau at all to a bureau whose director was removable at will.”

President Barack Obama’s administration had filed a brief during its final months supporting the CFPB. However, President Donald Trump, who has vowed to dismantle the Dodd-Frank Act that created the CFPB, was widely expected to have his DOJ reverse course.

The case will be reheard by the D.C. Circuit, sitting en banc, in May.

Give us feedback, share a story tip or update, or report an error.