President Trump has the power to remove CFPB Director Richard Cordray now and does not have to wait for a federal court to rule on the whether the agency’s structure is constitutional, three conservatives told a House subcommittee Tuesday.
“Please do not wait for the courts to fix Dodd-Frank,” said Adam White, a research fellow at the Hoover Institution, a think tank.
The president has the responsibility to protect the Constitution and not enforce an unconstitutional law, Theodore Olson, an attorney with Gibson, Dunn & Crutcher told the House Financial Services Oversight Subcommittee.
Olson represents PHH, a mortgage company that has filed suit against the CFPB challenging the constitutionality of the agency because the president can only remove the director for cause. A panel of the U.S. Appeals Court for the District of Columbia has sided with PHH, but the full appeals court has agreed to consider the case.
The Trump Administration has sided with PHH in the case.
Olson called the structure of the agency “very dangerous,” adding that “no one can control that agency.”
He said the president was stripped of the power to faithfully execute the power to faithfully execute the constitution.
Subcommittee ranking Democrat Al Green (D-Texas) blasted Republicans for allowing Olson to testify before the panel since he represents a plaintiff in a pending lawsuit. “The Congress of the United States should not be in this business of promoting litigation,” he said.
Rep. Michael Capuano (D-Mass.) agreed that Olson should not have testified. “I think that’s a massive conflict of interest.”
The president does not need to wait for the case to be litigated, said Saikrishna Prakash, an attorney at the University of Virginia Law School. He said there are numerous examples of presidents ignoring laws that he believes are unconstitutional.
Democrats and one witness defended the agency as the champion for victims of financial abuse.
“When financial firms rip you off, the CFPB gets your money back,” said Rep. Keith Ellison (D-Minn.).
Capuano said the committee has had many hearings on issues facing the CFPB, but only one that focused on its successes—a hearing dealing with the CFPB’s action against Wells Fargo.
Financial Services ranking Democrat Maxine Waters (D-Calif.) admonished the witnesses who called the agency unconstitutional.
“Are you simply the tools who would want to exploit, who would commit fraud…?” Waters asked the conservative witnesses.
Brianne Gorod, chief counsel at the Constitutional Accountability Center, a public interest nonprofit group, said she believes that the makeup of the agency is constitutional.
“First, the CFPB’s leadership structure—namely, the fact that it is led by a single Director removable only for cause—is consistent with the text and history of the Constitution, as well as Supreme Court precedent,” she said.
Rep. Lee Zeldin (R-N.Y.) said that while Democrats attacked Olson for testifying, they did not criticize Gorod, who has filed a brief in the PHH case on behalf of Democrats defending the agency.
He said it was hypocritical for Green to attack Olson, but not Gorod.
House Financial Services Chairman Jeb Hensarling (R-Texas) has said he will reintroduce legislation to overhaul Dodd-Frank, which created the CFPB. In his first version of the legislation, Hensarling converted the CFPB into a commission. Financial Services Committee Republicans have indicated that a new version of Hensarling’s legislation likely will retain the current single-director structure, but with greatly diminished powers.
Credit unions have called for changes to the CFPB’s structure and funding.
“Congress should enact legislation to clarify that credit unions are exempt from CFPB rules unless the Bureau demonstrates credit unions are causing consumer harm,” CUNA President/CEO Jim Nussle told the subcommittee in a letter.
