DC Circuit Reverses Decision Stripping CFPB of Autonomy


The second highest court in the country overturned a ruling that would have deprived the Consumer Financial Protection Bureau of independence.

The DC Circuit Court of Appeals on Wednesday reversed a decision stating that the CFPB Director could be fired at-will by the President.

“Congress validly decided that the CFPB needed a measure of independence and chose a constitutionally acceptable means to protect it,” Judge Cornelia Pillard wrote for a 6-3 majority.

One Republican appointee joined all five Democrats presiding over the case to uphold the agency structure, established in 2010 by the Dodd-Frank financial reform bill.

Banking industry lobbyists and right-wing think tank scholars had been among those who signed friend of the court briefings urging judges to change the CFPB structure.

“Indeed, the independence of financial regulators…is so well established by tradition and precedent that courts have assumed these agencies’ heads have removal protection even in the absence of clear statutory text so directing,” Pillard also wrote.

The en banc ruling invalidated a prior order made by a three-judge panel on the DC Circuit, the only appellate court with nationwide jurisdiction. In October 2016, the panel ruled 2-1 that the President should be able to fire the CFPB director without needing any justification.

“The director of the CFPB possesses more unilateral authority–that is, authority to take action on one’s own, subject to no check–than any single commissioner or board member in any other independent agency in the US government,” Judge Brett Kavanaugh wrote for the majority.

When Kavanaugh issued that opinion, the CFPB looked very different. A Democrat appeared on course to win the Presidency in 2016, and Obama-appointee Richard Cordray was still at the helm of the agency. Currently, top White House budget aide Mick Mulvaey is leading the CFPB

Since taking over, Mulvaney has come under fire for radically altering the mission of the agency. Earlier this month, he asked for no additional budget for an entire fiscal quarter, while announcing a through review of all CFPB operations.

Mulvaney has also stopped enforcing the Bureau’s payday loan rule–one forcing short-term high-interest lenders to determine if borrowers can afford their products.

On Wednesday, Congressional Democrats hammered Mulvaney on his payday order. Sens. Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.) and Jeff Merkley (D-Ore.), and Reps. Maxine Waters (D-Calif.), Al Green (D-Texas), and Keith Ellison (D-Minn.) questioned Mulvaney’s industry ties.

In a publicly released letter, they pointed out $60,000 in campaign donations that Mulvaney received from payday lenders while serving in Congress, including $4,500 from one that just announced the CFPB was dropping an investigation into its practices.

“What caused Mr. Mulvaney to reverse his prior position that only Congress has the ability to delay or reverse the CFPB payday rule?” they asked.

Mulvaney’s appointment itself is the subject of a legal battle. Before stepping down, Cordray said that Deputy Director Leandra English would serve as Acting Director, in the absense of a Senate-confirmed appointee. The ex-CFPB director said English’s authority was laid out by Dodd-Frank.

Though a District Court in Washington ruled that Mulvaney’s appointment passed legal muster, English has appealed that decision to the DC Circuit. Last week, the appellate court granted her motion for an expedited review.

Share this article:

Follow The District Sentinel on Facebook and Twitter.

Subscribe to our daily podcast District Sentinel Radio on Soundcloud or Apple.

Support The District Sentinel and get bonus content on Patreon.

Since 2010, Sam Knight's work has appeared in Truthout, Washington Monthly, Salon, Mondoweiss, Alternet, In These Times, The Reykjavik Grapevine and The Nation. In 2012, he worked as a producer for The Alyona Show on RT. He has written extensively about political movements that emerged in Iceland after the 2008 financial collapse, and is currently working on a book about the subject.


Go to Top