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October 12, 2016

D.C. Circuit Declares CFPB Structure Unconstitutional

The U.S. Court of Appeals for the District of Columbia yesterday declared the structure of the Consumer Financial Protection Bureau (CFPB) to be unconstitutional “because too much power is vested with its sole director,” reports Reuters.

The case in question involved PHH Corp., which argued CFPB Director Richard Cordray overstepped his authority by unilaterally overturning a $6.5 million fine imposed by an internal CFPB judge in favor of a $109 million fine, and that the CFPB structure was unconstitutional. 

The court threw out the $109 million penalty and ruled the CFPB structure unconstitutional, with U.S. Circuit Judge Brett Kavanaugh writing that the CFPB’s structure “poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”

Rather than shutting down the CFPB, however, the court ruled the bureau can continue to operate “by allowing the president to remove the director at will.”

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