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The CFPB is Probably Here to Stay

The United States Court of Appeals for the District of Columbia Circuit, the second most important court in the country, in PHH Corp. v. Consumer Fin. Prot. Bureau, 2016 U.S. App. LEXIS 18332 (D.C. Cir. Oct. 11, 2016), held that the CFPB’s internal structure is unconstitutional.

Immediately after the opinion was issued, I received an email with the subject: “BREAKING NEWS: DC Court of Appeals Rules CFPB Structure is Unconstitutional.” The Washington Post immediately issued an article titled, “Federal appeals court rules the structure of CFPB is unconstitutional.”[1] Even Politico got into the fray with an article titled, “Conservatives win big in landmark ruling against Consumer Finance (sic) Protection Bureau.”[2]

I can only imagine the joy that many of us involved in consumer finance felt when reading these headlines, thinking that the Consumer Finance protection Bureau ("CFPB") was being dissolved.

The CFPB is structured as an independent agency headed by a single Director and not by a multi-member commission, which is customary for independent agencies. Id. at *7. Article II of the United States Constitution permits Congress to create independent agencies that exercise executive power. Id. at *4. “An agency is considered ‘independent’ when the agency heads are removable by the President only for cause, not at will, and therefore are not supervised or directed by the President.” Id.

Examples of independent agencies include the FCC, NLRB, and the SEC. The problem that the Court found with the CFPB is that it is not truly an independent agency as it is “headed by a single director and not by a multi-member commission, …” Id. at *7. As the Court explained, “the Director enjoys more unilateral authority than any other officer in any of the three branches of the U.S Government, other than the President.” Id.

The Court concluded that, “[t]he CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.” Id. at *10 (emphasis supplied). PHH Corp., the petitioner, argued that the Court must shut down the entire CFPB. Id. at *12.

While the Court had the power to shut down the CFPB, it instead chose to make the CFPB an executive agency whose Director is appointed and serves at will to the President. Id. at *12-13. Obviously, the President will appoint a Director who shares his or her belief as to the role of the CFPB. It will be the President’s responsibility to ensure that the Director does not abuse his or her power.

It is almost a certainty that this matter will find itself before the United Supreme Court within the next year. The three members of the DC Circuit that heard and decided the case are considered to be traditional jurists. It is entirely possible that a Supreme Court, made up of jurists with different philosophies, finds that the CFPB’s current structure is constitutional.

It will be the President’s responsibility to decide what role the CFPB takes if the Supreme Court allows the ruling to stand. A President who believes in a powerful CFPB will appoint a Director who takes an active role, while a President who believes that the CFPB should not be a powerful agency will appoint a Director who is more aligned with the interests of businesses.

Since presidents are elected every four years, any corporation that falls under the CFPB’s purview should have the mindset that the CFPB will continue to be a powerful institution with an active role in regulating consumer transactions.

The attorneys and staff at Gill Law Firm practice exclusively in the areas of collections law, small business and nonprofit startups. To find out how the firm may assist you, please contact us via email at or by phone at (561) 454-0301.


[1] Jonelle Marte, Federal appeals court rules the structure of CFPB is unconstitutional, Washington Post, Oct. 11, 2016,

[2] Lorraine Woellbert, Conservatives win big in landmark ruling against Consumer Finance Protection Bureau,, Oct. 11, 2016,

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