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This week several special interest groups, as well as Congressional Democrats petitioned to join the PHH lawsuit, which is challenging the CFPB’s constitutional authority and structure. Additionally, legal experts continued to opine on whether President Trump has the authority to remove CFPB Director Richard Cordray and what could follow such an action.
The Constitutional Accountability Center asked to intervene in the PHH lawsuit on behalf of Senate Banking Committee ranking member Sherrod Brown and House Financial Services Committee ranking member Maxine Waters.
The motion states, “Until now, movants’ interests in this case have been adequately represented by the CFPB, which has zealously defended the constitutionality of the Bureau’s structure. Recently, however, it has become increasingly clear that movants’ interests may no longer be adequately represented by the new Administration.”
It argues that the Members of Congress should have standing to become part of the lawsuit. It further states that, “In short, it is possible that the new Administration could prevent review of the panel decision in this case—either by attempting to fire the CFPB’s current director, or by prohibiting the Bureau from seeking Supreme Court review should this Court decline to grant the pending petition for en banc review.”
Additionally, Americans for Financial Reform, the Center for Responsible Lending, Self-Help Credit Union, The Leadership Conference on Civil and Human Rights, U.S. Public Interest Research Group and Maeve Elise Brown, chair of the CFPB Consumer Advisory Board filed a motion for leave to intervene in the litigation.
This motion states, “The presidential election, however, has affected the possible positions of the parties in this case, giving rise to the instant motion. In particular, President Trump has voiced strong opposition to the Dodd-Frank reforms that created the CFPB, and multiple news outlets have reported over time that his team is considering steps that would directly affect the conduct of this litigation.”
Both motions indicate concern that President Trump could dismiss Director Cordray, which could change the course of the litigation and impact the construct of the CFPB. Throughout the week, there has been a lot of debate in Washington, D.C. about what will happen next.
Some lawyers have argued that it is clearly within the authority of President Trump to remove Director Cordray. In an article published in National Review, Aditya BamzaiSaikrishna Prakash stated, “To begin with, presidents may independently assess the constitutionality of statutes and act upon their assessments…The Constitution vests the ‘executive Power’ in a single president, and requires that he ‘take Care that the Laws be faithfully executed.’ These provisions have long been understood to grant the president the power to fire executive officers.”
Alternatively, in an article published in Bloomberg Cass Sunstein argues that firing Director Cordray would create a constitutional crisis. She states, “Both Republican and Democratic presidents have not loved the idea of independent agencies, operating outside of their daily control. But in 1935, the Supreme Court unanimously agreed that the Constitution gives Congress the power to create such entities. The court has stuck with that position ever since -- and for decades no president has even tried to remove the heads of independent agencies.” She further argues, “On the day of his removal, Cordray would be within his rights to go to court to seek a judgment that the president acted beyond his constitutional authority. This would be quite a spectacle.”
Additionally, both President Trump and Vice President Pence made statements in Philadelphia at the Republican retreat indicating a desire to rollback excessive regulation of certain participants in the financial services marketplace. President Trump stated that he will, "pursue financial reform that will help striving Americans get the credit they need to realize their dreams."
CUNA is continuing to follow this debate and will keep credit unions updated about any additional actions taken.
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