CFPB structure ruled unconstitutional by 3-judge panel

CFPB structure ruled unconstitutional by 3-judge panel

A three-judge panel has delt a severe blow to the Consumer Financial Protection Bureau (CFPB). The panel for the U.S. Court of Appeals for the District of Columbia Circuit said that too much power is invested in the agencyês director and laid out a remedy: The president will be able to fire the director at will. Currently, after the director is nominated by the president and confirmed by the Sentate, he or she serves a five-year term and can be removed only for cause.

–The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury,” the court wrote. In creating the CFPB under the 2010 Dodd-Frank Act, Congress gave the director –more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president,” the court wrote. All three judges on the panel were appointed by Republican presidents.

The agency has said it disagrees with the ruling, but has not yet said whether it will challenge it.

NADA has fought the power and the directives of the CFPB for several years. The most controversial action against dealers was one where the agency accused captive finance companies through dealers of discrimination against minorities in the way they approved consumer auto loans. Although the agency does not have the power to regulate auto dealers as credit arrangers, dealers have felt the impact of CFPBês directives as lenders adjusted their practices under regulator pressure.

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