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D.C. Circuit Grants CFPB’s Request to Defend Single-Director Structure

February 16, 2017

By Gregory Arroyo

WASHINGTON D.C. — The Consumer Financial Protection Bureau will get the chance to defend the constitutionality of its single-director structure, the full D.C. Court of the Appeal decided today.

The D.C. Circuit granted the bureau’s request to reconsider last October’s three-judge ruling that the bureau’s structure is unconstitutional, vacating a decision that gave the president the authority to remove the director of the CFPB at will. Prior to that ruling, the CFPB could only be removed by the president for cause.

In its two-page order, the D.C. Circuit directed the parties to address specific questions, including whether the CFPB’s structure is consistent with Article II of the Constitution, and if the court can avoid deciding that constitutional question given the panel’s ruling on the statutory issues in the case. If the bureau’s structure is ruled unconstitutional, the court will decide whether severing the for-cause provision is the proper remedy.

The case came about after the bureau fined New Jersey-based mortgage lender PHH Corp. for allegedly accepting kickbacks from mortgage insurers. The lender appealed the fine, which led to Tuesday’s decision. And as part of that ruling, the federal appeal court threw out the bureau’s $109 million fine against PHH.

The D.C. Circuit scheduled oral arguments for March 24, with briefing scheduled for March 10.

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