“Since the Dodd-Frank Wall Street Reform Act was enacted six years ago, members of Congress have attacked the law, including the Consumer Financial Protection Bureau (CFPB), tirelessly” states a letter from CFED sent this morning (see attachment download, near the end of this post, below). “…the next Congress and Administration are likely to work closely together to attack Dodd-Frank and the CFPB. There is a real danger that moderate Democrats will even join Republicans to undermine these protections.”
As the days count down to President-elect Donald Trump’s inauguration, the saga of the Consumer Finance Protection Bureau (CFPB) continues to play out.
What the CFED letter fails to mention is to their supporters is that the CFPB provided funding to CFED.
Even when it was documented that the CFPB regulations were harmful to manufactured home owners and buyers, CFED continued to support the CFPB, and attacked all who would modify their regulations.
Even when video of Richard Cordray, the CFPB director himself saying there was very little predatory lending in manufactured housing, CFED and their allies continued to attack any who suggest any change at all to the regulations.
Now, The Great Battle over the CFPB is Looming
American Banker columnist John Heltman writes “The political independence of the Consumer Financial Protection Bureau may end not with a bang — after a protracted battle in Congress — but with a whimper, the victim of a bureaucratic rule that prevents the agency from appealing a pending court case to the Supreme Court.”
A recent ruling by the D.C. Circuit in the PHH case in October, which the Daily Business News covered here, determined that the single-director structure of the CFPB was incompatible with its status as an independent federal agency, and that director Richard Cordray would have to serve at the pleasure of the president to avoid violating the Constitution’s separation of powers.
“This is unprecedented, and there are a lot of people who are confused and I think a lot of speculation about what’s going to happen,” said Thaya Brook Knight, associate director of financial regulation studies at the Cato Institute.
While the CFPB is appealing the decision, their ability to get the ruling overturned may actually hinge on whether or not the Justice Department will allow the case to move forward.
With Donald Trump taking office, and Senator Jeff Sessions being nominated for Attorney General, that could be tricky for fans of the CFPB.
But, there’s more.
A big challenge for the agency is Title X of the Dodd-Frank Act, which established the CFPB. The title gives the agency explicit authority to pursue its own litigation up to and including the Circuit Court level, but when it comes to the Supreme Court, the law says the CFPB must first file a written request to the U.S. Attorney General within a specified timeframe and that the “Attorney General concurs with such request or fails to take action within 60 days of the request.”
In essence, Donald Trump and Jeff Sessions could “run out the clock” by taking no action, effectively blocking the CFPB’s appeal to the Supreme Court.
Heltman writes that this scenario leaves CFPB with relatively few options to prevail in their case with PHH.
The agency has requested an en banc (full court) rehearing of the matter before all sitting justices on the D.C Circuit. If either that request for rehearing is denied or is granted or the panel upholds the earlier ruling, the Justice Department could prevent the CFPB from appealing the case further.
Even though President-elect Trump has not taken office, one former Treasury official believes that he would stop the CFPB in its tracks.
“I assume that one of the first orders of business of a Trump Justice Department will be to end that appeal and effectively confess judgment, say ‘Yes, it was unconstitutional,’ and then fire [CFPB Director Richard] Cordray,” the former Treasury official said.
“I’ve never seen a case where the eagle was on both sides of the case. That would actually sort of be proof that the ruling was right, wouldn’t it?”
Another possible scenario is that President-elect Trump could remove Cordray from his role.
According to AMI Newswire, Mark Calabria, the director of financial regulation studies at the Cato Institute in Washington, D.C., sees a strong case for Trump removing Cordray right after he assumes the presidency, based on the language in the Dodd-Frank Act and the director’s administrative record.
“The first thing that can be done is replacing the director,” said Calabria.
“Eventually a commission might take over, but it’s highly unlikely that would happen next year. Expect Congress to eventually limit the agency’s powers to take action against financial institutions for ‘abusive’ practices.”
As noted above, the bureau also has its supporters and detractors.
“In just a few years since it was created, it has returned more than $11 billion to more than 27 million Americans ripped off by financial firms,” said Dennis Kelleher, President of Better Markets a Wall Street watchdog. “After more than a decade of being victimized by financial predators, that is great news for America’s financial consumers.”
“The bureau is immune from traditional congressional oversight and is at odds with America’s democratic principles,” said Senator James Lankford (R-Okla.) last week in a report detailing wasteful spending by the federal government.
“Almost everything the CFPB does is redundant to another federal agency. It should never have been created. The best use of funds would be to abolish the CFPB and spend the available dollars to reform and appropriately staff the other regulatory entities.”
The manufactured housing industry’s professionals have strong feelings about the agency and its impact. The Daily Business News will continue to monitor the moves to reform or entirely repeal Dodd-Frank and the CFPB, and those who strive to defend it. ##
(CFED letter to supporters on the CFPB referenced above is available as a download, linked here.)
(Image credits are as shown above.)
Submitted by RC Williams to the Daily Business News for MHProNews.