The plot thickens in the ongoing battle for the Consumer Financial Protection Bureau, the controversial agency created in the wake of the 2008 financial crisis. Yesterday, a federal appeals court decided it would grant rehearing of last year’s case, PHH v. CFPB, which held the agency’s structure to be unconstitutional. The decision issued last year not only ruled the agency’s structure to be unconstitutional, but also placed the director under the president’s authority, giving the president the power to fire the director at will. Now that the court will rehear the case, its earlier decision is no longer binding, meaning the president can no longer rely on it if he wishes fire Director Richard Cordray.
The bureau is the brain-child of Massachusetts Senator Elizabeth Warren, but even the progressive firebrand did not dream up an agency as powerful as the one that congress ultimately created. Senator Warren, then a private citizen, initially proposed a commission structure. While independent commissions, such as the Securities and Exchange Commission (SEC), are constitutionally questionable (they are not directly accountable to the President or Congress, and are therefore outside the three branches of government established by the Constitution), they have the benefit of both precedent and a measure of checks and balances. As Judge Kavanaugh noted in the initial PHH v. CFPB decision, a structure like the SEC’s allows the commissioners to serve as checks on each other. The SEC is by law bi-partisan, with no more than three of the five seats filled by members of the same party, and there is pressure for the chair to get consensus from all five commissioners or risk a reputation for divisiveness and partisanship. Other regulators, like the Commodity Futures Trading Commission and the Federal Trade Commission, have similar structures.
Read more at https://www.cato.org/blog/road-cordrays-removal-just-got-longer
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