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Consumer Watchdog Rebuffed by Court

Structure of CFPB held unconstitutional.
Consumer Watchdog Rebuffed by Court
October 19, 2016

A federal appeals court ruled that the unusual independent structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional, calling it a “gross departure” from the checks and balances normally imposed on regulatory agencies. The ruling by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit allowed the CFPB to continue operating, but ordered a restructuring that would put the agency under the authority of the White House and give the president the power to remove the agency’s director.

Under the current structure, the CFPB director’s five-year term is intended to outlast a president's term in office. In the ruling, Judge Brett Kavanaugh wrote that Congress gave the CFPB director “more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president.” He added that the problem of checks and balances was particularly acute because the agency has enormous power over American business, consumers and the overall economy. Republican critics have long pushed legislation that would rein in the authority of the agency created under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.

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