As we previously discussed, in October 2016, a 3-judge panel of the D.C. Circuit reviewing an enforcement action by the CFPB determined that the Bureau’s director is subject to at-will removal by the President.  The Bureau subsequently petitioned for re-hearing before the full court.

Late last week, following a motion to intervene by several state Attorneys General, Senator Sherrod Brown (D-OH) and Representative Maxine Waters (D-CA) filed a joint motion to intervene, as did a group of six unrelated parties (comprising four public interest organizations, a credit union, and a member of the Bureau’s Consumer Advisory Board).   In their briefs, both sets of potential intervenors argue that their intervention is necessary because the Bureau may be unable to adequately defend the case, particularly in the event its current Director, Richard Cordray, is removed by President Trump.  In particular, Senator Brown and Representative Waters argue that they have an interest in seeing the Bureau structure they put in place as legislators retained, while the other intervenors argue, in sum, that they and the constituencies they represent would be harmed should the termination of Director Cordray derail Bureau policy initiatives and enforcement activities.

As we explained in a prior post, the motions for intervention are of practical importance for two reasons.  First, as noted, President Trump could seek to remove Director Cordray and replace him with a new director who is willing to withdraw the Bureau’s appeal.  Second, while the Bureau has independent litigating authority before the lower courts, it would need the consent of the Justice Department to pursue a further appeal to the U.S. Supreme Court.*  Accordingly, even if Director Cordray were to remain in office, should the Bureau lose its petition for re-hearing, or should it lose on the merits before the full D.C. Circuit, the intervenors may be the only parties willing and able to pursue the case before the Supreme Court.

Continue Reading Legislators and Others Seek To Intervene in PHH v. CFPB Litigation

On Inauguration Day, January 20, 2017, the Trump administration issued a freeze on new regulations by executive agencies, and on January 23, 2017, the administration ordered a freeze on hiring employees by executive agencies.  Each of these actions has the potential to affect federal financial regulation.

Continue Reading Trump Administration Issues Regulatory and Hiring Freezes

Today Senators Chuck Schumer (D-NY), Sherrod Brown (D-OH), Elizabeth Warren (D-MA) and others voiced their opposition to any attempt by President-elect Donald Trump to oust Richard Cordray, the current Director of the Consumer Financial Protection Bureau (“CFPB”), before Cordray’s term ends in July 2018. They also sent a letter to Cordray outlining and praising his

As we discussed in a recent client alert, the U.S. Court of Appeals for the Tenth Circuit held on December 27, 2016, in Bandimere v. SEC, that the Securities and Exchange Commission’s use of administrative law judges (“ALJs”) to adjudicate enforcement actions is unconstitutional.  The decision has created a circuit split that breathes new life into an independent constitutional ground on which the D.C. Circuit or the U.S. Supreme Court could decide PHH Corp., et al. v. Consumer Financial Protection Bureau without reaching the controversial issues of the bureau’s structure and CFPB Director Richard Cordray’s status.

Continue Reading Circuit Split May Affect PHH Appeal

As we noted in a recent post, the CFPB has sought reconsideration of the D.C. Circuit Court of Appeals’ decision in PHH Corp., et al. v. Consumer Financial Protection Bureau. In that decision, the D.C. Circuit ruled unconstitutional the provision of the Dodd-Frank Act establishing that the CFPB Director could be fired only “for

The transition to a new administration with the election of Republican Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring substantial change to each of the federal financial regulatory agencies. Changes in leadership at those agencies will likely result in substantial changes in policy regarding regulations, compliance, enforcement, and transactions.  While these transitions will take place over different time frames depending on the agency, there is unique uncertainty regarding how quickly the transition will take place at the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) and what that transition will entail.

The uncertain situation at the CFPB results, in part, from the fact that the Bureau is a new agency that has not previously experienced a change in administration. Moreover, the Bureau has been a controversial agency from its inception and it currently faces substantial questions about the constitutionality of its single-Director structure,  threats of Congressional disapproval of its recent and planned regulations, and legislation designed to change its structure and funding.


Continue Reading Post-Election Outlook for Financial Regulatory Agencies: The Consumer Financial Protection Bureau

As we noted in a recent client alert, a panel of the D.C. Circuit Court of Appeals ruled earlier this year that the provision of the Dodd-Frank Act that established that the CFPB Director could be fired only “for cause” was unconstitutional.  The Bureau filed a petition on November 18 asking the Court of Appeals to reconsider that ruling en banc.  The petition is here.

The Bureau’s petition characterizes the panel’s constitutional holding as “dramatic and unprecedented,” creating “what may be the most important separation-of-powers case in a generation.” In short, the Bureau notes that the Supreme Court has allowed Congress to establish independent agencies with leaders who may only be fired “for cause,” and argues that a single-director independent agency deserves the same treatment.

Continue Reading CFPB Seeks Reconsideration of PHH Opinion

On October 25, 2016, CFPB Director Richard Cordray delivered remarks to the Mortgage Bankers Association regarding the recovery of the mortgage industry.  Director Cordray discussed several of the CFPB’s mortgage-related initiatives, including the reporting requirements under Regulation C, which implements the Home Mortgage Disclosure Act, and the “Know Before You Owe” mortgage disclosure rule