In a reversal of its October 2016 ruling, on Wednesday January 31, 2018 the United States Court of Appeals for the D.C. Circuit held that the single-director structure of the Consumer Financial Protection Bureau and protections which require cause to remove the director, are constitutional.  See PHH Corp. et al., v. CPFB, Case No. 15-1177 (D.C. Cir. Jan. 31, 2018).

In its decision, the Court explained:

Congress established the independent CFPB to curb fraud and promote transparency in consumer loans, home mortgages, personal credit cards, and retail banking. See 12 U.S.C. § 5481(12). The Supreme Court eighty years ago sustained the constitutionality of the independent Federal Trade Commission, a consumer-protection financial regulator with powers analogous to those of the CFPB. Humphrey’s Executor v. United States, 295 U.S. 602 (1935). In doing so, the Court approved the very means of independence Congress used here: protection of agency leadership from at-will removal by the President. The Court has since reaffirmed and built on that precedent, and Congress has embraced and relied on it in designing independent agencies. We follow that precedent here to hold that the parallel provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act shielding the Director of the CFPB from removal without cause is consistent with Article II.


The Court’s opinion may be viewed by clicking here.

Stay tuned for further developments.

These materials were written by Tricia Engelhardt of Aldrich & Bonnefin, PLC