Removing Barriers Blog

CFPB Appeals U.S. Court of Appeals Decision Finding that Its Structure is Unconstitutional
Posted November 21, 2016 by CUNA Advocacy

On Friday afternoon the CFPB appealed the PHH decision from the U.S. Court of Appeals, which found that its structure is unconstitutional. The CFPB is seeking an en banc review from the full court of the decision handed down by a three-judge panel. 

CUNA recently discussed how this court ruling could impact efforts in the new administration and Congress to change the construct of the CFPB, by changing the leadership structure from a single director to a five-board commission, and potentially placing it under the appropriations process. 

The U.S. Court of Appeals will have to decide whether the whole court will review the decision.  If it does, which is likely given the importance of the case in shaping the future agency and creating precedent, the current decision is stayed until a decision by the full court is made.  

If it is denied, the CFPB would then have to seek a stay of the mandate from the D.C. Circuit, otherwise the decision is in effect. If the CFPB were to lose at this stage, it would be likely to then appeal the decision to the Supreme Court. 

A decision in this case will determine whether President-elect Trump can remove the Director of the CFPB “at will” or if he can only do so “for cause”.  In other words, once it is fully litigated if the Director can be removed “at will” it is likely that President-elect Donald Trump will do so. 

The timing of the review, and the different appeals that could happen may take some time for a resolution.  CUNA will be closely following the progress of this litigation and any parallel legislative efforts.