Collector - April 2018 - 46
D.C. Circuit Court of Appeals Rules
in PHH v. CFPB
Nation's second-highest court upholds reversal of the CFPB's enforcement
ruling, but finds CFPB structure constitutional.
By Karen Scheibe Eliason
he day after President Donald
Trump gave his State of the Union
address celebrating his federal
regulatory rollbacks as one of the biggest
triumphs of his first year in office, the
U.S. Court of Appeals for the District of
Columbia Circuit handed down its highly
anticipated decision in PHH Corporation v.
Consumer Financial Protection Bureau (No.
15-1177), the landmark case challenging the
constitutionality of the Consumer Financial
Protection Bureau authority.
The 250-page en banc opinion issued by
the full bench of the D.C. Circuit Court Jan.
31 said the agency's single-director structure
is indeed constitutional and that its director
can only be fired by the president for
"inefficiency, neglect of duty, or malfeasance
in office." The 7-3 ruling overturns, in part,
a 2-1 ruling by a three-judge panel of the
same court in 2016. It also notably has an
impact on the administration's policy goals
to continue to roll back financial regulations
and defang the CFPB.
Writing for the court, D.C. Circuit
Judge Nina Pillard said that there is "no
constitutional defect" in the unusual
independence that lawmakers granted to
the bureau's director. Judge Pillard added:
"Congress's decision to provide the CFPB
director a degree of insulation reflects its
permissible judgment that civil regulation
of consumer financial protection should be
kept one step removed from political winds
and presidential will."
The appellate court's decision was,
however, not a total loss for PHH Corp. and
other companies facing CFPB investigations.
Although the D.C. Circuit Court upheld the
CFPB's structure, it more importantly tossed
out a $109 million penalty that the CFPB
had issued to PHH Corp. and returned the