Collector - August 2017 - 42
D.C. Circuit Court Holds Oral Argument
in Appeal Over Constitutionality of CFPB
The panel of judges focused their questions almost entirely on the constitutional
issues at stake in the PHH Corp. et al v. CFPB case, with very little time devoted to
the statutory holdings from the October 2016 panel decision.
By Maria Wolvin and Karen Scheibe Eliason
aking another look at an October
2016 decision that ruled the
structure of the Consumer Financial
Protection Bureau unconstitutional, in May
the full slate of judges on the federal appeals
court for the District of Columbia heard the
much-anticipated oral argument in PHH
Corp. v. CFPB.
The PHH Corp. case carries broad
implications for the future of the CFPB in
the era of the Trump administration. Maria
Wolvin, ACA International's vice president
and senior counsel of regulatory affairs,
attended the oral argument.
The Department of Justice, whose
position notably shifted under President
Donald Trump to side with the three-judge
panel's October decision, successfully
requested to have its own allotted time for
argument. As a result, PHH, the DOJ and
the CFPB each had individual time for
While the panel decision addressed both
constitutional and statutory issues, May's
oral argument focused almost exclusively on
questions concerning presidential authority
and the constitutionality of the CFPB.
In particular, the judges questioned how
seriously the CFPB, in its current form,
limits the president's power to faithfully
execute the laws, as well as whether the
D.C. Circuit Court has the authority to
rule in favor of PHH on the constitutional
issues in light of Supreme Court precedent.
Members of the media and public line up outside the E. Barrett Prettyman Federal Courthouse in Washington, D.C.
PHH, through former solicitor general
Ted Olson, argued that Article II cannot be
clearer and that Congress cannot intrude
on the president's power to control the
Describing the CFPB as "manifestly
unconstitutional," PHH asserted that the
combination of the CFPB's unique features-
including its single-director structure,
its clear executive functions and its lack
of accountability-all have a significant
impact on diminishing presidential power
and demonstrate why the PHH Corp. case
is vastly different than the other Supreme
Court cases cited by the judges.
In its closing, PHH also urged the panel
of judges to reinstate the statutory holdings
from the October 2016 panel opinion, noting
their importance to industry.
For its part, the DOJ described the CFPB
as a "quintessential executive agency" and
that a "for cause" only removal restriction for
the director of the CFPB is an unwarranted
limitation on the president's executive power.
The DOJ also argued that Supreme Court
precedent does not bind the D.C. Circuit
from upholding the panel decision because
that rationale does not apply given the
differences in the CFPB's structure. The DOJ
went on to assert that nothing about the
CFPB demonstrates the need for any kind
of exception like the narrow one supported
previously by the Supreme Court.
The CFPB countered by arguing the
relevant question is not whether the
president's power is diminished by the CFPB,
but whether the president retains "sufficient"
authority to faithfully execute the laws. To
this, the CFPB asserted that as long as the
president can remove an official "for cause,"