Appeals court to reconsider challenge to consumer bureau

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By Lawrence Hurley and Lisa Lambert

<span class="articleLocation”>A U.S. appeals court said on Thursday it will
reconsider an October ruling that the Consumer Financial
Protection Bureau’s structure is unconstitutional, virtually
guaranteeing the battle over an agency borne of the financial
crisis will reach the Supreme Court.

A full panel of 10 judges on the U.S. Court of Appeals for
the District of Columbia Circuit, will decide the case after
hearing oral arguments on May 24.

A three-judge panel had ruled in October that the CFPB vests
too much power in its sole director. It also said the president
should be able to fire the director at will, but stayed the
decision pending appeal.

That decision has now been wiped off the books.

The losing side, either the agency created in the 2010
Dodd-Frank Wall Street reform law or the mortgage lender PHH
Corp that sued it, is expected to appeal to the Supreme
Court after the court issues its ruling.

The court’s order indicated that the court’s chief judge,
Merrick Garland, will not participate. That means that there
would be six judges appointed by Democratic presidents and four
appointed by Republicans deciding the case.

An agency to protect individuals from predatory and
discriminatory lending was the idea of liberal Democratic
Senator Elizabeth Warren of Massachusetts. Its creation is
considered one of the top domestic policy achievements of former
President Barack Obama, also a Democrat.

Republicans in Congress blocked Obama from naming Warren its
first director when the CFPB began operating in 2011, and Obama
instead appointed Richard Cordray when the lawmakers were in

But the fight has raged on and is expected to remain heated
in 2017.

The Republican chairman of the House of Representatives
Financial Services Committee is floating the idea of granting
the president the freedom to fire the CFPB’s director for any
reason through legislation.

Meanwhile Trump has ordered a review of Dodd-Frank’s effects
on the economy and met with former Republican Representative
Randy Neugebauer, a CFPB critic who has long pushed to rein in
its activities. That has raised speculation Trump is laying the
groundwork to replace Cordray with his own director and begin
making reforms from the inside.

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