D.C. Circuit Court Upholds Constitutionality of CFPB’s Single-Director Structure

The D.C. Circuit Court of Appeals has determined that the Consumer Financial Protection Bureau’s current single-director structure is constitutional.  In a reversal of an earlier ruling, the decision preserves the current structure of the agency, protecting the CFPB director from removal by the President without cause.


PHH Mortgage Corp., a lending company that was fined by the CFPB in 2015 brought the challenge to the constitutionality of the CFPB’s management structure.  In its October 2016 decision in favor of PHH, the three-judge D.C. Circuit panel ruled that a sole director serving a five-year term would make it insufficiently accountable to the President.


But the decision of the full, en banc D.C. Circuit Court on January 31, 2018 upheld the constitutionality of the agency’s design.  In the Court’s opinion, The Honorable Nina Pillard wrote that the President does not enjoy “illimitable power of removal” over such agencies as the CFPB.  The Court affirmed Congress’s original vision for the agency, concluding that, “civil regulation of consumer financial protection should be kept one step removed from political winds and political will.”


Opponents of the CFPB have persistently targeted its centralized structure.  A bipartisan bill introduced in Congress in March proposed that the Bureau’s single director be replaced by a presidentially appointed five-member commission, a measure arguably designed to dilute the agency’s efficacy.  Attacks on the CFPB are likely to continue, even as the legitimacy of its Trump-appointed director, Mick Mulvaney, remains in question.


Read the full decision here.