The CFPB is likely to be on its own when it attempts to defend its current structure before a federal appeals court this Spring, according to recent developments in a lawsuit filed against the agency.
The U.S. Court of Appeals for the District of Columbia has granted a request by the Trump Administration to file a brief in the case. That request likely means that the administration intends to side with the plaintiffs in the suit challenging the agency’s structure.
The court again also rejected a request from Democratic state attorneys general, two congressional Democrats, consumer groups and the Self-Help Credit Union to intervene in the suit.
In the suit, filed by PHH, a mortgage company, a panel of the U.S. Circuit Court of Appeals for the District of Columbia ruled that the structure of the CFPB is unconstitutional because it is governed by a single director – currently Richard Cordray – who can only be removed for cause. The panel said that the president should be able to fire the director for any reason.
However, the appeals court granted a request by the agency to have the entire appellate court consider the ruling.
The Obama Administration had sided with the CFPB in the suit. However, the Trump Administration is likely to side with PHH, according to an analysis by attorneys in the Consumer Financial Services Group at Ballard Spahr, a law firm.
Indeed, in its request to file a brief, the Trump Justice Department signaled that it may not side with the CFPB.
“As this Court recognized in calling for the views of the United States on the question whether rehearing should be granted, the views of the United States on matters involving the President’s removal power are not always entirely congruent with the views of independent agencies,” the Justice Department said.
The groups had argued that they should be permitted to intervene since the Trump Administration likely would not mount a vigorous defense of the CFPB.
If the full court of appeals rules against the CFPB, the agency may not be able to take the case to the U.S. Supreme Court. The agency would need the approval of the Justice Department to take the case to the Supreme Court, said Alan Kaplinsky, the leader of the Consumer Financial Services Group at Ballard Spahr.
