Two appeals court judges are questioning whether the structure of the CFPB violates Article II of the Consitution
Appeals court judges raised constitutional questions about the structure of the CFPB Monday.
Last year, the CFPB rendered a $109.2 million judgment against PHH Corp. for allegedly accepting illegal kickbacks. The company is appealing the decision, and one of the issues it has raised is whether the structure of the agency violates the Constitution’s doctrine of separation of powers, according to a report in American Banker.
According to the report, two judges with the U.S. Court of Appeals are considering the question, and said that CFPB attorneys should be prepared to answer constitutional questions at the next hearing, including, “What independent agencies now or historically have been headed by a single person?” The judges also asked what the remedy would be if an independent agency headed by one person violated Article II of the Constitution.
Richard Horn, a former senior counsel at the CFPB, told American Banker that there could be a conflict between the statute that created the CFPB – under which its director can only be removed “for cause” – and Article II, which allows the president to remove any executive officer.
“It looks like the court is taking a narrow view and determining whether to strike the ‘for cause’ provision of the statute,” Horn told American Banker.
Republican lawmakers have long protested the CFPB’s structure, saying its single director is largely unaccountable. They have pushed for a five-person commission to lead the agency.
Last year, the CFPB rendered a $109.2 million judgment against PHH Corp. for allegedly accepting illegal kickbacks. The company is appealing the decision, and one of the issues it has raised is whether the structure of the agency violates the Constitution’s doctrine of separation of powers, according to a report in American Banker.
According to the report, two judges with the U.S. Court of Appeals are considering the question, and said that CFPB attorneys should be prepared to answer constitutional questions at the next hearing, including, “What independent agencies now or historically have been headed by a single person?” The judges also asked what the remedy would be if an independent agency headed by one person violated Article II of the Constitution.
Richard Horn, a former senior counsel at the CFPB, told American Banker that there could be a conflict between the statute that created the CFPB – under which its director can only be removed “for cause” – and Article II, which allows the president to remove any executive officer.
“It looks like the court is taking a narrow view and determining whether to strike the ‘for cause’ provision of the statute,” Horn told American Banker.
Republican lawmakers have long protested the CFPB’s structure, saying its single director is largely unaccountable. They have pushed for a five-person commission to lead the agency.
