Full Panel of DC Circuit Upholds CFPB Structure, Reversing Earlier Decision

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Although it lost its constitutionality argument, the court upheld the panel's opinion for PHH on the RESPA issue.

Wednesday's decision did have good news for PHH with the court reinstating an earlier ruling throwing out the $109 million fine the CFPB levied against PHH, which was the catalyst for the lawsuit.

When the bureau's first director, Richard Cordray, resigned this past November, just months his five-year term was set to expire, Trump thwarted an attempt by Cordray to hand the agency's reigns to his deputy, Leandra English.

Pillard said giving the CFPB director a degree of insulation "reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will". But that ruling was later vacated, and now the U.S. Court of Appeals for the District of Columbia Circuit and sided with the agency's supporters. "Independence has always been associated with financial regulators with wide latitude to oversee and steady financial markets and the national economy", the ruling says.

In the three-court panel's ruling on the statutory issues in RESPA of the PHH case, it found that the CFPB's retroactive application of its RESPA Section 8 interpretation, when it departed from HUD's prior interpretations issued in 1997, violated "bedrock principles" of due process.

Unlike the CFPB, other independent agencies, such as the Securities and Exchange Commission and Federal Communications Commission, are controlled by bi-partisan panels.

The CFPB, an independent banking regulator that has taken on Wall Street abuses and protected American consumers, is one of the most vital tools created to get our economy back on track.

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"I am deeply disappointed with the court's decision and hope the Supreme Court will review the ruling in short order", Hensarling said.

Full DC Circuit upholds structure of Consumer... Wall Street interests, the banking and consumer finance industries and Republicans in Congress have fiercely opposed and criticized the agency, accusing it of overreaching in its regulation. The CFPB has said that over five years it has recovered $11.7 billion that it returned to more than 27 million harmed consumers.

Others suggested the decision could impact a separate case challenging Mulvaney's leadership, putting the Justice Department in a bind as to whether it should appeal the PHH case.

Republicans in Congress have long lambasted the CFPB, in part because the director is protected from removal barring misconduct.

The case will likely be appealed to the U.S. Supreme Court by the Trump Administration, which has cited the CFPB's unaccountability to the executive and legislative branches of government. A judge ruled in early January in favor of Trump and the White House, denying English an injunction to keep Mulvaney out of the job. "A historic ruling, maybe soon on its way to the Supreme Court".

"This is a positive for PHH Corp., as the reinstatement of the appeals court decision should dramatically reduce - if not completely eliminate - the company's enforcement liability for mortgage reinsurance deals", wrote Jaret Seiberg, an analyst at Cowen Washington Research Group.

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