Full Appeals Court Will Rehear Case on Constitutionality of CFPB Structure

A U.S. appeals court on Thursday granted a request from the Consumer Financial Protection Bureau to reconsider an October ruling that allows the president to fire the CFPB director at will.

The U.S. Court of Appeals for the D.C. Circuit ruled that it would rehear the October ruling in PHH v. CFPB, which bolstered the long-running campaign by financial groups and Republicans to restructure the agency into a five-member bipartisan commission. The en banc hearing, in front of the full appeals court rather than a three-judge panel, gives the CFPB another chance to make the case that its structure is not unconstitutional.

The agency’s single-director structure has drawn criticism from Republicans and financial industry leaders.

Richard Hunt, president and chief executive of the Consumer Bankers Association, a group pushing for a commission structure, said in a statement that the decision “only creates further uncertainty regarding the constitutionality of the CFPB.” He called for Congress and the Trump administration to “move immediately to address this concern on behalf of consumers.”

Robert Weissman, president of the left-leaning advocacy group Public Citizen, said in a statement that the ruling “gives hope that the earlier flawed decision will be reversed.”

Debate over the CFPB’s scope, authority and structure will likely intensify outside the courtroom. Congressional Republicans are preparing to make changes to the 2010 Dodd-Frank law, which established the CFPB, that would limit the consumer agency’s powers. Democrats have been resistant to those proposals.

Briefings

Finance Brief: Week in Review & What’s Ahead

The Treasury Department recommended a significant curbing of authority at the Consumer Financial Protection Bureau, along with allowing the agency’s director to be fired at will, in a report required by an executive order President Donald Trump signed in February. While the report does not call for a full repeal of Volcker Rule limits on proprietary trading, it recommended exempting small institutions from the Dodd-Frank regulation.

Finance Brief: CFPB Proposes Changes to Prepaid Card Rule

The Consumer Financial Protection Bureau announced plans to make changes to its prepaid card rule, with public comments on the proposals due within 45 days. The CFPB’s proposals would adjust the rule to require consumers register any prepaid cards before filing a complaint, and would allow providers to send disclosure forms to consumers digitally in some cases.

Finance Brief: Warren Says Democrats Open to Loosening Regulations for Community Banks, Credit Unions

Sen. Elizabeth Warren (D-Mass.) said Senate Democrats are open to working with Republicans on “targeted” measures that would ease regulations affecting community banks and credit unions. Warren, who has shown little willingness to work with the GOP on loosening financial regulations, said she remains opposed to proposals that would limit consumer protections or weaken regulations for big banks.

Finance Brief: Treasury Department Recommends Changes to CFPB, Volcker Rule

The Treasury Department recommended a significant curbing of authority at the Consumer Financial Protection Bureau, along with allowing the agency’s director to be fired at will, in a report required by an executive order President Donald Trump signed in February. The report does not call for a complete repeal of Volcker Rule limits on proprietary trading but instead proposes exempting small institutions from the Dodd-Frank regulation.

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