The Consumer Financial Protection Bureau has been a target of conservatives. It’s now part of a broader war against Trump, as some disgruntled employees are reportedly using encrypted devices to communicate with each other. They are called “Dumbledore’s Army”. No, I’m not kidding.
It all stems from a leadership battle between Office of Budget and Management Mick Mulvaney and deputy director Leandra English. English was expected to take over after the departure of former principal Richard Cordray, who left to run for Ohio governor. However, because it is an executive branch agency, Trump had full authority to appoint Mulvaney as acting director. English filed a legal challenge to the appointment, but the court ultimately ruled that Mulvaney should become the agency’s top employee. It should surprise no one that people, especially on the agency’s advisory board, criticized the Mulvaney regime. Mulvaney recently decided to fire the entire board.
Now a federal judge has ruled so the structure of the CFPB is unconstitutionaltherefore, the lawsuit against RD Entities, the cash dispensing company, cannot proceed (via Reuters):
A federal judge in New York ruled Thursday that the structure of the U.S. Consumer Financial Protection Bureau is unconstitutional, meaning the agency cannot bring a lawsuit against a company that pays people waiting for a settlement.
This ruling also disagrees with a previous en banc decision issued in January by the D.C. Court of Appeals that found the structure was legal (via Policy):
A federal appeals court has upheld the constitutionality of the Consumer Financial Protection Bureau’s structure, a decision that protects the agency’s independence in the face of challenges from business interests and conservatives.
The D.C. Circuit Court of Appeals ruled Wednesday by a 7-3 majority that a provision of the 2010 Dodd-Frank Act that limits the president’s ability to remove the CFPB director during his five-year term does not violate the president’s authority to appoint and remove executive branch officials.
The ruling was largely along ideological lines, with one George W. Bush appointee joining all Democratic-appointed judges in favoring maintaining the Consumer Bureau structure. All three dissenting justices were Republican appointees.
Does this mean the CFPB is on life support? I know many people hope so. This entire issue will most likely be decided by the Supreme Court (through Hill):
Judge Loretta Preska of the Southern District of New York ruled that the creation of the CFPB as an independent agency whose director could only be fired for misconduct was unconstitutional.
[…]
Preska, an appointee of former President George H. W. Bush, agreed with part of the D.C. Court of Appeals’ original ruling against the CFPB, which found that the agency’s “structure is unconstitutional because it is an independent agency exercising significant executive authority and under its headed by a single director.”
[…]
Acting Director of the CFPB Mick Mulvaney last month he sought to protect the agency’s involvement in a case against RD Legal Funding initiated by his predecessor, Richard Cordray. The lawsuit alleges that RD Legal defrauded both survivors of the September 11 terrorist attacks and National Football League veterans battling the effects of severe concussions in exchange for monetary compensation for their injuries.
Although the CFPB has now been dismissed from the lawsuit, Preska ruled that New York Attorney General Barbara Underwood, who replaced Schneiderman in May, can pursue the case against RD Legal under Dodd-Frank.
Thursday’s ruling increases the likelihood that the Supreme Court will address the issue of the constitutionality of the CFPB in the next term. The Fifth Circuit Court of Appeals will do so as well hear the challenge to the constitutionality of the CFPB, and a ruling against that bureau could force the Supreme Court to reconcile conflicting opinions.
Mulvaney is he was vehemently opposed on the existence of the CFPB, so, as some have noted, Christmas came early for the OMB director?
The district court finds the CFPB unconstitutional and holds that the solution is to close the entire case https://t.co/rg1RRbrRYJ pic.twitter.com/aP7wVxYU4E
— Andrew M. Grossman (@andrewmgrossman) June 21, 2018
Judge Henderson’s analysis of severability can be found here, on page 166 of the PDF: https://t.co/xdLSO3C4qs. It starts: pic.twitter.com/ztm5bHMWlh
— Andrew M. Grossman (@andrewmgrossman) June 21, 2018
Christmas comes early for Mick Mulvaney. https://t.co/Ku6rTKlYSu
— Philip Wegmann (@PhilipWegmann) June 21, 2018
