Consumer Financial Protection Bureau: Difference between revisions

| budget          = [[United States dollar|US$]]596 million (FY 2021)

The CFPB's creation was authorized by the [[Dodd–Frank Wall Street Reform and Consumer Protection Act]], whose passage in 2010 was a legislative response to the [[financial crisis of 2007–08]] and the subsequent [[Great Recession]]<ref name="WSOFP">{{cite web |author=Eaglesham, Jean |date=February 9, 2011 |title=Warning Shot On Financial Protection |url=https://www.wsj.com/articles/SB10001424052748703507804576130370862263258?mod=googlenews_wsj |access-date=February 10, 2011 |work=[[The Wall Street Journal]]}}{{subscription required}}</ref> and is an independent bureau within the [[Federal Reserve]].<ref>{{Cite web |title=Consumer Financial Protection Bureau |url=https://www.federalregister.gov/agencies/consumer-financial-protection-bureau |access-date=2023-02-28 |website=Federal Register}}</ref> The CFPB's status as an independent agency has been subject to many challenges in court. In June 2020, the [[United States Supreme Court]] ruled that the president [[Unitary executive theory|can remove]] the director without cause but allowed the agency to remain in operation. The Bureau is one of the agencies that [[Project 2025]] advocates that Congress should cut.<ref>{{Cite news |date=July 31, 2024 |title=Is this the end of Project 2025, the plan that riled Donald Trump? |url=https://www.economist.com/the-economist-explains/2024/07/31/is-this-the-end-of-project-2025-the-plan-that-riled-donald-trump |access-date=2024-08-04 |newspaper=The Economist |issn=0013-0613}}</ref>

Elizabeth Warren, who proposed and established the CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome strong [[Republican Party (United States)|Republican]] opposition.<ref>{{cite web|url=https://www.latimes.com/business/la-xpm-2011-sep-07-la-fi-consumer-bureau-cordray-20110907-story.html|title=GOP stalls confirmation of consumer agency nominee|date=September 7, 2011|author=Puzzanghera, Jim|work=[[Los Angeles Times]]}}</ref> On July 17, President Obama nominated former [[Ohio Attorney General]] and [[Ohio State Treasurer]] [[Richard Cordray]] to be the first formal director of the CFPB.<ref>{{cite web|url=https://www.nytimes.com/2011/07/18/business/former-ohio-attorney-general-picked-to-lead-consumer-agency.html|title=Former Ohio Attorney General Picked to Lead Consumer Agency|access-date=July 17, 2011|date=July 17, 2011|work=The New York Times|author=Appelbaum, Binyamin}}</ref> Prior to his nomination, Cordray had been hired as chief of enforcement for the agency.<ref>Bennett D, Dougherty C. (2011). [https://www.bloomberg.com/news/2011-07-07/elizabeth-warren-s-dream-becomes-a-consumer-bureau-she-may-never-lead.html Elizabeth Warren's Dream Becomes a Real Agency She May Never Get to Lead]. ''Bloomberg''.</ref>

In October 2016, the Court of Appeals for the District of Columbia Circuit ruled that it was unconstitutional for the CFPB director to be removable by the [[president of the United States]] only for cause, such as "inefficiency, neglect of duty or malfeasance."<ref name="Cowly2016">{{cite news|last1=Cowley|first1=Stacy|date=October 12, 2016|title=Court Upholds Consumer Agency, Minus Its Leader's Job Security|page=B2|work=The New York Times|url=https://www.nytimes.com/2016/10/12/business/dealbook/consumer-financial-protection-bureau-court-ruling-unconstitutional.html?_r=1|access-date=October 18, 2016}}</ref> Circuit Judge [[Brett Kavanaugh]], joined by Senior Circuit Judge [[A. Raymond Randolph]], wrote that the law was "a threat to individual liberty" and instead found that the president could remove the CFPB director at will.<ref name=Cowly2016/>  Circuit Judge [[Karen L. Henderson]] agreed that the CFPB Director had been wrong in adopting a new interpretation of the [[Real Estate Settlement Procedures Act]], finding the [[statute of limitations]] did not apply to the CFPB, and fining the petitioning mortgage company [[PHH Corporation]] $109 million, but she dissented from giving the president a new power to remove the director, citing [[constitutional avoidance]].<ref>{{cite news|last1=Frankel|first1=Alison|date=October 11, 2016|title=The D.C. Circuit's gratuitous ruling on CFPB constitutionality|work=[[Reuters]]|url=http://blogs.reuters.com/alison-frankel/2016/10/11/the-d-c-circuits-gratuitous-ruling-on-cfpb-constitutionality/|url-status=dead|access-date=October 18, 2016|archive-url=https://web.archive.org/web/20161015123334/http://blogs.reuters.com/alison-frankel/2016/10/11/the-d-c-circuits-gratuitous-ruling-on-cfpb-constitutionality/|archive-date=October 15, 2016}}</ref> The U.S. Court of Appeals for the District of Columbia Circuit vacated the decision and ordered ''[[en banc]]'' review.<ref>{{cite web|date=October 11, 2016|title=PHH Corporation v. CFPB, No. 15-1177 (D.C. Cir. 2017)|url=https://law.justia.com/cases/federal/appellate-courts/cadc/15-1177/15-1177-2017-02-16.html|access-date=November 27, 2017|website=Justia}}</ref> On January 31, 2018, the ''en banc'' D.C. Circuit found that the CFPB's structure was constitutional by a vote of 7–3. Judge [[Cornelia Pillard]], writing for the majority, found that the [[Take Care Clause]] does not forbid [[independent agencies of the United States government|independent agencies]], while each of the circuit judges from the earlier panel wrote separate dissents.<ref>{{cite news|last1=Weiss|first1=Debra Cassens|date=31 January 2018|title=Full DC Circuit upholds structure of Consumer Financial Protection Bureau|language=en|work=[[ABA Journal]]|url=http://www.abajournal.com/news/article/full_dc_circuit_upholds_structure_of_consumer_financial_protection_bureau|access-date=5 April 2018}}</ref>

Chief Justice [[John Roberts]] wrote the majority opinion joined by conservative Justices [[Clarence Thomas]], [[Samuel Alito]], [[Neil Gorsuch]], and [[Brett Kavanaugh]]. Roberts wrote that the CFPB structure with a single point of leadership that could only be removed for cause "has no foothold in history or tradition", and has only been used in four other instances: three current uses for the [[United States Office of Special Counsel]], the [[Social Security Administration]], and the [[Federal Housing Finance Agency]], and temporarily for one year during the [[American Civil War]] for the [[Office of the Comptroller of the Currency]].<ref name="cnbc decision" /> Roberts wrote that the three current uses "are modern and contested. And they do not involve regulatory or enforcement authority comparable to that exercised by the CFPB."<ref name="cnbc decision" /> Roberts also wrote that the CFPB structure "is also incompatible with the structure of the Constitution, which—with the sole exception of the Presidency—scrupulously avoids concentrating power in the hands of any single individual."<ref name="cnbc decision" /> Roberts referred back to the precedent established by ''Humphrey's Executor'' and ''Morrison'' as a basis for the majority's decision.<ref name="reason decision">{{cite web | url = https://reason.com/2020/06/29/with-chief-in-charge-scotus-strikes-down-louisiana-abortion-law-and-eliminates-cfpb-independence/ | title = With Chief in Charge, SCOTUS Strikes Down Louisiana Abortion Law and Eliminates CFPB Independence | first = Jonathan | last = Adler | date = June 29, 2020 | access-date = June 29, 2020 | work = [[Reason (magazine)|Reason]] | archive-date = June 29, 2020 | archive-url = https://web.archive.org/web/20200629232919/https://reason.com/2020/06/29/with-chief-in-charge-scotus-strikes-down-louisiana-abortion-law-and-eliminates-cfpb-independence/ | url-status = live }}</ref>

In 2018, the [[Community Financial Services Association of America]] sued the CFPB over its 2017 rule that blocked lenders to attempt to collect funds from borrowers' accounts after two consecutive failed attempts, unless the borrower had consented. Part of its argument in the case was that the CFPB's budgetary structure was unconstitutional, as it did not receive funding through Congressional appropriations but requested its funding through the Federal Reserve. While the district court ruled against the association, the [[Fifth Circuit]] ruled in favor of the association in October 2022, deeming that its funding structure was unconstitutional.<ref>{{cite web | url = https://www.reuters.com/markets/us/us-consumer-protection-watchdogs-funding-unconstitutional-court-rules-2022-10-20/ | title = U.S. consumer protection watchdog's funding unconstitutional, court rules | first = Nate | last = Redmond |date = October 20, 2022 | accessdate = October 20, 2022 | work = [[Reuters]] }}</ref>