PHH vs. CFPB: Cordray won’t be around to see the outcome of the case

Lending

With Consumer Financial Protection Bureau Director Richard Cordray only a handful of days away from officially leaving his position, the director probably won’t be around to see the outcome of the controversial PHH vs. CFPB case.

The case questions whether the structure of the CFPB is unconstitutional, with PHH arguing that the bureau’s director has too much power and that the bureau operates without supervision or oversight.

However, the drawn-out battle between the two sides has yet to come to an end, meaning Cordray will likely be gone from the bureau before a decision is made, a decision that might have unseated him as director anyway.  

According to an article in Forbes by Jessica Karmasek, Cordray’s sudden departure as head of the bureau will likely have no impact on a decision of the U.S. Court of Appeals for the District of Columbia Circuit regarding the bureau’s structure, citing an interview with Richard Andreano, a practice leader of Ballard Spahr’s Mortgage Banking Group.

From the article:

Andreano said the D.C. Circuit’s pending decision in PHH Corporation v. CFPB will likely strongly influence how other courts address the CFPB structure issue.

“While the CFPB can try cases on its own authority up to the appellate courts, it can go to the Supreme Court only with the assistance of the Justice Department. Even with Cordray still in place, the belief in the industry was that the Justice Department would not agree to seek Supreme Court review of the CFPB structure issue if the CFPB lost on that issue at the Court of Appeals.”

Shortly after President Donald Trump took office, the U.S. Department of Justice switched sides in the PHH case and filed an amicus brief, asking the court to rule the CFPB’s leadership structure unconstitutional and grant Trump the authority to fire the CFPB director at will.

The last update on the case came in May when the full D.C. Circuit heard PHH’s appeal. The ruling could be announced any day now.

The Forbes article questioned whether anything else will change in the case now that a Republican could be put in charge of the CFPB.

Trump is reportedly close to tapping Mick Mulvaney, who currently serves as director of the Office of Management and Budget and has long been outspoken about his dislike for the CFPB, to replace Cordray as the bureau’s director.

From the article:

Andreano said he is eager to see how things play out in the coming months.

“Once there is a Director, or Acting Director, appointed by President Trump in place, there could be interesting results,” he said.

“For example, with a Director appointed by President Obama in place, the Trump administration has advocated the position that the CFPB structure is not constitutional. With a Director appointed by President Trump in place, will the Trump administration back off that position?”

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