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Democrats rally together to support CFPB in case against PHH

Fight to protect bureau’s independent structure and constitutionality

Congressional Democrats filed an amicus brief on Friday with the D.C. Circuit Court of Appeals in support of the Consumer Financial Protection Bureau.

Procedurally, after the court granted a rehearing of the case en banc, meaning that it would allow the entire court to hear the case, amicus briefs supporting PHH had to be filed by March 10 and amicus briefs supporting the CFPB had to be filed by March 31.

Congresswoman Maxine Waters, D-CA, ranking member of the House Committee on Financial Services, and 39 other Democratic members filed the amicus brief in support of the bureau’s independent structure and constitutionality. 

“After extensively studying the roots of this crisis…Congress established a consolidated federal agency, the Consumer Financial Protection Bureau, with the sole mission of protecting Americans from harmful practices of the financial services industry,” the lawmakers wrote. “In creating the Bureau, lawmakers determined that it needed two key attributes to fulfill its mission: independence, and the ability to act promptly and decisively in response to new threats to consumers.”

According to the press statement from the U.S. House Committee on Financial Services Democrats, the amicus brief highlights three main points:

1. Congress has constitutional authority to shape the structure of the executive branch.

2. Congress made a considered decision when it created an independent Consumer Bureau led by a single director to promote swift and decisive action to protect consumers.

3. The text and history of the Constitution, along with decades of Supreme Court precedent, make clear that the Consumer Bureau’s leadership structure is constitutional.

The Democrats have continued to fight for the bureau and its Director Richard Cordray since tensions started rise around its constitutionality.

Back at the start of the year, when talks to fire Cordray heightened, Democrats in Congress banned together to make sure Cordray wouldn’t be prematurely unseated amid strengthening calls from Republicans to have the director fired.

But as the battle around Cordray and the CFPB plays out in Congress through several possible bills floating around, it’s simultaneously playing out in the PHH case.

The case stems from the CFPB’s fight against PHH, which started with a $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks.

The fight ended, or so it appeared, with the CFPB’s leadership structure being declared unconstitutional by the U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 vote.

The CFPB fought that ruling, asking the court to rehear the case en banc. And then in February of this year, the full court of appeals granted that request, meaning the CFPB can now defend its constitutionality before the full court.

This is where the Democrats’ amicus brief supporting the CFPB comes into play.

And the Congress Democrats were not alone in their support. Consumer and civil rights groups, along with legal scholars, also submitted amicus briefs in support of the bureau on Friday. The amici urge the full D.C. Circuit Court of Appeals to maintain a strong, independent agency to protect American consumers.

“Since its creation, the CFPB has played a critical role in protecting the nation’s consumers, and the agency’s vigor as a consumer advocate depends in no small part on its independence,” said Scott Nelson, attorney at Public Citizen. “Longstanding principles of separation of powers leave no doubt that Congress has the power to create watchdog agencies directed by leaders whose autonomy is ensured by statutory prohibitions on firing them without good cause.”

On the other side, briefs supporting PHH had to be filed by March 10. One noteworthy brief filed in support of PHH is the United States government's brief.

After the United States government began to give off indications that it might be switching sides in early March, it officially filed an amicus brief in the PHH vs. CFPB case, asking the court to rule the CFPB’s leadership structure unconstitutional and grant President Donald Trump the authority to fire the CFPB director at will.

From here, according to the court, arguments in the appeal are scheduled for May 24, 2017.

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