Court agrees to reconsider constitutionality of consumer agency's structure

Rep. Ratcliffe Introduces Bill on Consumer Financial Protection Act of 2010

President Trump has promised to scrap 75 percent of all US regulations and to dismantle the Dodd-Frank Act, the 2010 legislation that created the CFPB and imposed tough new regulations on Wall Street.

A panel of three federal appeals judges in Washington, DC, ruled in October that the single-director structure of the Consumer Financial Protection Bureau - opposed by Republicans since its inception in 2010 - was unconstitutional, and expanded the authority of the president to remove the director. With the previous appellate court ruling vacated, President Donald Trump can remove CFPB Director Richard Cordray only for cause.

In the earlier ruling by a three-judge panel, the appeals court wiped out $109 million in penalties imposed on a New Jersey-based mortgage company that the CFPB said had violated federal real-estate transaction rules.

Cordray's term runs through 2018, and under the legislation that established the CFPB, he can not be fired.

While the panel stopped short of granting the company's request to strike down the bureau itself, reopening the case puts that issue back in play. This month, two Republican senators asked Trump to fire Cordray, calling him "King Richard".

Can the court decide the case without weighing on the question of constitutionality? The ruling allows the embattled agency to defend the constitutionality of its leadership structure.

Sixteen states' attorneys general, all Democrats led by Connecticut's George Jepsen, on January 23 petitioned the court for permission to intervene.

The initial ruling said the CFPB's leadership structure - a single director loosely accountable to the US president and only removable for good cause - violated constitutional and historical precedents for federal regulators. The members of such commissions normally are split between the political parties. The agency had punished PHH for referring customers to insurers who then purchased reinsurance from a PHH subsidiary.

But on Thursday, the full US Court of Appeals for the DC Circuit agreed to rehear the case, scheduling the next round of arguments for May 24.

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