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April 13, 2016

Will the D.C. Circuit Declare the CFPB’s Structure Unconstitutional?

In a hearing held yesterday before the U.S. Court of Appeals for the D.C. Circuit, the “question appeared to be not whether the judge would alter the bureau’s (Consumer Financial Protection Bureau) structure, but rather how much,” reports the National Law Journal

The hearing is a result of a lawsuit filed by New Jersey mortgage lender, PHH Corp., which says 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. 

The three-judge panel “pressed the bureau’s lawyer to defend the novelty of the CFPB’s structure and why it didn’t violate separation of powers.” The judges could declare the CFPB structure unconstitutional.

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