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Politics & MoneyMortgage

Could Trump’s Supreme Court nominee mean the end of the CFPB?

Brett Kavanaugh fights against bureau’s constitutionality

President Donald Trump announced Monday night his pick for the next U.S. Supreme Court Justice – a move that could be an end to the Consumer Financial Protection Bureau as we know it.

Supreme Court Justice nominee Brett Kavanaugh would replace Justice Anthony Kennedy, a moderate justice who recently announced his retirement. Kavanaugh’s nomination would swing the court significantly to the right.

In addition to some of his views such as overturning Roe v. Wade and other socially conservative ideals, Kavanaugh also has a record of leaning right when it comes to business regulation. This includes his view that the CFPB, in its current form, is unconstitutional.

Back in 2016, PHH, a mortgage lender, made national headlines when it challenged CFPB Director Richard Cordray’s $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks.

To combat this fine, PHH brought a case against the CFPB, challenging Cordray’s authority to levy the additional fine and the constitutionality of the CFPB, and after much deliberation, the court agreed with PHH on all counts.

This decision was made by three justices of the U.S. Court of Appeals for the District of Columbia, with Kavanaugh writing the court’s decision.

“As an independent agency with just a single Director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision making, and poses a far greater threat to individual liberty than does a multi-member independent agency,” Kavanaugh wrote. “All of that raises grave constitutional doubts about the CFPB’s single-Director structure.”

“By ‘unilateral power,’ we mean power that is not checked by the President or by other colleagues,” he wrote. “Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power. That is not an overstatement.”

But the CFPB fought back against the ruling, bringing it to the full Court of Appeals. When Cordray left the bureau, Acting Director Mick Mulvaney changed the tune, asking the court to declare his own agency’s structure unconstitutional.

Earlier this year, the full Court of Appeals handed down its ruling, declaring the CFPB to be constitutionally structured and that the director is removable only for cause.

But now, with Kavanaugh’s nomination to the Supreme court, the CFPB’s future is once again at stake.

In an interview with MSNBC on Monday night, Sen. Elizabeth Warren, D-Mass, who played a critical role in the formation of the CFPB, said she fears the bureau’s future under the new nominee’s right-leaning views.

“He’s already said he thinks it’s unconstitutional because it has a single director rather than multiple director instead of multiple directors, which – it’s not the only agency that has a single director,” Warren said in the interview. “In fact, the Environmental Protection Agency is another one that has a single director, and we also have the Comptroller of the Currency.”

Some members of the housing market have already begun to stand with the president in his nomination of Kavanaugh.

“NAHB supports President Trump's nomination of Judge Kavanaugh as Associate Justice to the U.S. Supreme Court,” said Randy Noel, National Association of Home Builders chairman. “He is a worthy successor to retiring Justice Anthony Kennedy.”

“Throughout his distinguished career, Judge Kavanaugh has been recognized for his sharp legal mind and as a stalwart defender of our Constitution,” Noel said. “Judge Kavanaugh is eminently qualified to serve on our nation's highest court. We would urge all senators to vote yes on his confirmation and oppose any efforts to delay consideration.”

But a quick nomination may not be in the cards for Kavanaugh. While the Republicans hold control of the Senate, they can’t lose a single vote as they hold just a 51 to 49 margin. And with Sen. John McCain, R-Ariz., fighting brain cancer, that number slips down to 50 to 49.

Some more moderate Republicans, such as Sen. Susan Collins, R-Maine, and Sen. Lisa Murkowski, R-Alas., could be problematic in the nomination process, which needs a simple majority.

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