Federal judge questions CFPB's constitutionality

by Ryan Smith13 Apr 2016
A federal appeals court judge is questioning the constitutionality of the Consumer Financial Protection Bureau.

According to a Wall Street Journal article, one of the judges on the appeals court panel settling the legal battle between PHH and the CFPB is unsure about the constitutionality of the agency’s structure. The issue rests on the CFPB’s finding that PHH accepted illegal kickbacks in violation of the Real Estate Settlement Procedures Act. CFPB Director Richard Cordray ruled that PHH violated RESPA every time it accepted a kickback on or before July 21, 2008.

That greatly surpassed the scope of the original administrative law judge’s ruling in the case, according to a HousingWire report. The original ruling only applied to kickbacks on loans closed after that date.

Appeals Court Judge Brett Kavanaugh called it “very problematic” that Cordray was able to unilaterally make that decision, according to the Wall Street Journal.

“You are concentrating huge power in a single person and the president has no power over it,” Kavanaugh said.

It’s expected to be several weeks before the appeals court issues a decision in the case – and any decision against the CFPB is expected to be appealed, the Journal reported.


Should CFPB have more supervision over credit agencies?