Patrice has already penned an excellent post on the D.C. Circuit Court of Appeals ruling that the Consumer Financial Protection Bureau, the brainchild of progressive Senator Elizabeth Warren, was structured in an unconstitutional manner. Until this ruling, CFPB head Richard Cordray had virtually unlimited power.
Just want to add a few observations from the Wall Street Journal on the ruling:
This is a triumph for democratic accountability and thus individual liberty as envisioned by America’s founders. Writing for a three-judge panel of the D.C. Circuit Court of Appeals, Judge Brett Kavanaugh noted that under Article II of the Constitution “the President alone is responsible for exercising the executive power.” The President, unlike the many bureaucrats he oversees, must answer to voters.
The problem is that under the 2010 Dodd-Frank law that created the consumer bureau, the director serves a five-year term, and the President can only fire the director for cause. While the Supreme Court has (unfortunately) blessed so-called independent agencies for decades, such agencies have traditionally been controlled by bipartisan commissions as a check on the power of any single person.
Because one man runs the powerful consumer bureau, the court observed that he “enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.” He also “possesses enormous power over American business, American consumers, and the overall U.S. economy.”
The case against the CFPB was brought by a mortgage company called PHH that acted in accordance with federal guidelines of another agency, but Cordray unilaterally held that the relevant statute of limitations didn't apply. A disgorgement penalty of $6.4 million had been set for the compan, but Mr. Cordray raised it to $109 million "on his own whim." Hardly the rule of law.
The victory wasn't as far reaching as conservatives might have hoped, however:
Some of us hoped the court would find the entire CFPB unconstitutional, but the ruling highlights again what a rush job Dodd-Frank was. Then professor and now Senator Elizabeth Warren proposed the consumer agency as a multi-member commission. So did the White House. But late in the game the bureau’s director became an unconstitutional authority unto himself. Ms. Warren sniffed in reaction to the ruling that it is merely a “technical tweak” that would be overturned on appeal, which shows how much contempt for the Constitution progressive elites now have.
If Congress won’t kill the CFPB, then it should at least make it conform to the normal constraints on independent federal agencies. And if Donald Trump wins, he should fire Mr. Cordray immediately.
The idea behind the CFPB is that consumers are too benighted to make their own financial decisions and must be protected from themselves and the depredations of lenders by a bureaucrat such as Mr. Cordray.
This ruling came from a three-judge panel. The CFPB will likely appeal for an en banc hearing.