What’s the CFPB ruling mean? Not much, says Elizabeth Warren

by Ryan Smith12 Oct 2016
A federal appeals court ruled yesterday that the structure of the Consumer Financial Protection Bureau was unconstitutional. So what does that mean for the businesses regulated by the CFPB? According to Sen. Elizabeth Warren, not much.

The US Court of Appeals for the District of Columbia ruled yesterday that the CFPB’s director wasn’t sufficiently answerable to the president. That, the court ruled, was a violation of the Constitution’s separation of powers. But Warren (D-Mass.), the architect of the agency, criticized the decision, which she said “bizarrely relies on a mischaracterization of my original proposal for a new consumer agency.” Warren said the decision “will likely be appealed and overturned.”

“But even if it stands, the ruling makes a small, technical tweak to Dodd-Frank and does not question the legality of any other past, present or future actions of the CFPB,” Warren said.

That’s not far from the truth. While Republicans have long demanded that the agency’s single director be replaced with a bipartisan panel, the ruling didn’t order any sweeping changes to the CFPB’s structure. While the court’s decision did say an agency headed by a single director could pose “a threat to individual liberty,” it didn’t specifically order that the director be replaced by a committee. Instead, the court merely ruled that the president needed the power to remove the director at will.
Currently, the president can only remove the director of the CFPB for cause.
Read more: In her statement on the ruling, Warren insisted that the agency was “highly accountable to both Congress and the President” – which isn’t entirely accurate. Congress doesn’t even control the agencies funding, which comes directly from the Federal Reserve.

But Warren defended the agency, saying that “continued Republican efforts to transform the agency’s structure or funding should be seen for what they are: attempts fostered by big banks to cripple an agency that has already forced them to return over $11 billion to customers who have been cheated.”
 

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