- The Washington Times - Wednesday, January 31, 2018

The Consumer Financial Protection Bureau — the controversial Wall Street cop Congress set up in the wake of the 2008 collapse — is constitutional, a federal appeals court ruled Wednesday, delivering a major win to liberals who had pushed for the independent watchdog.

The 7-3 decision means that the CFPB can continue to operate with a powerful single chief who cannot be removed by the president at will, and whose budget is independent of Congress’s decision-making.

That gives the bureau extraordinary power outside the usual checks and balances of government, which is exactly what President Obama and Democrats in Congress intended when they established the CFPB in 2010, tasking it with finding banks and other financial institutions deemed to be taking advantage of consumers.

“That independence shields the nation’s economy from manipulation or self-dealing by political incumbents and enables such agencies to pursue the general public interest in the nation’s longer-term economic stability and success, even where doing so might require action that is politically unpopular in the short term,” wrote Judge Cornelia Pillard, the Obama appointee who wrote the main opinion for the U.S. Circuit Court of Appeals for the District of Columbia.

But the bureau may be less independent than Mr. Obama and his allies had hoped.

Even as it upheld the power of the CFPB being concentrated in one unelected director, the appeals court suggested the person holding that job can be ousted over something as minor as a policy disagreements.

That could clear the way for any president to remove a predecessor’s pick.

The fight over the bureau’s legal status dates back to its creation and its first director, Obama-appointee Richard Cordray, a crusading anti-Wall Street activist.

Mr. Cordray abruptly resigned last year and, in a spate of last-minute moves, named an acolyte, Leandra English, as deputy director. He had hoped that would make her acting director once he left.

President Trump countered, saying as president he had power to name acting officials. He asked budget director Mick Mulvaney to do double-duty as head of the CFPB.

Ms. English sued to try to win the position instead of Mr. Mulvaney, but lost her first round in court. She’s now appealed to the same judges who just ruled the CFPB constitutional.

The fight over the director’s position is understandable, given how critical the job is.

The CFPB vests all of its power in the director, whose funding comes directly from the Federal Reserve and can’t be cut by Congress, and who is appointed for a five-year term. Since a presidential term is four years, that means a president could go an entire administration without getting to appoint someone to the position.

The director can be removed for “inefficiency, neglect of duty, or malfeasance in office.”

“No one person in America — especially someone who is unelected — should have the authority to unilaterally control whether working Americans can get a mortgage or a checking account,” said Rep. Jeb Hensarling, Texas Republican and chairman of the House Financial Services Committee.

He urged the Supreme Court to hear the case.

Wednesday’s ruling came from the D.C. Circuit court sitting as a whole. The judgment spanned 250 pages and included more than a half-dozen opinions.

Every Democratic appointee on the court who took part in the case ruled in favor of the CFPB as it exists now, while three of the four Republican appointees ruled against it.

“Consent of the governed is a sham if an administrative agency, by design, does not meaningfully answer for its policies to either of the elected branches. Such is the case with the Consumer Financial Protection Bureau,” wrote Judge Karen LeCraft Henderson, one of the GOP appointees who agreed that the bureau’s structure is unconstitutional.

Another GOP appointee, Judge Thomas B. Griffith, issued a concurring opinion agreeing the CFPB is legal, but only so long as the president can interpret the law to let him fire the director for policy disagreements.

Judge Pillard, the chief author for the Democratic-appointed judges, said overturning the bureau’s structure would also undercut a number of other institutions such as the Federal Trade Commission or the Securities and Exchange Commission, which have independent boards to govern them.

But the dissenting judges said only the CFPB puts all of that power in a single person.

Mr. Cordray, to date the only person to hold the position of confirmed director, took to Twitter to praise what he called “a historic ruling.”

“Today’s decision is all about maintaining independent law enforcement free from politics,” he tweeted. “We are seeing that theme over and over again in efforts by the courts to check the rogue use of executive power.”

He, too, predicted the case could end up in the Supreme Court.


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