Tied to the Whipping Post? CFPB Rehearing

The Consumer Financial Protection Bureau was created out of the Dodd-Frank Wall Street Reform Act, but RESPA was codified in federal statute in the 1970s. In October of 2016, a three judge panel of the US Court of Appeals for the D.C. Circuit issued a ruling regarding the CFPB in a case that has wide ramifications across the RESPA related professions. Since October 2016, you can only imagine that director of the CFPB, Richard Cordray, can’t help but feel, in the words of Gregg Allman, “like he’s been tied to the Whipping Post.”

If any of you are familiar with this classic tune, the Allman Brothers band (criminally underrated in the annals of history) lament that they are run down, lied to, called fools, all for loving you.

The ruling from October, in the PHH Corporation v. CFPB case, found that the structure of the CFPB was unconstitutional. Granted, the panel stated that this was remedied simply by altering the statute limiting the President’s power to remove the director except “for cause.”At the time, while tough, the ruling did not appear to be a death knell to Director Cordray. After October, the nation saw an election where the elected leadership immediately stated their intent to dismantle Dodd-Frank. The panel’s removal of that statutory language would allow the President to remove the director as he would any other appointee. “Good lord I feel like I’m dying….”

The CFPB has now petitioned for en banc review; this type of review occurs where someone petitions for a hearing of the entire Court, not just a panel. Because the previous decision was rendered before a panel, the court has granted that petition for review. A hearing before the full DC Circuit has been scheduled for May 24, 2017.

In good news for the CFPB, the October panel decision has been vacated. The CFPB will continue operating as it did before October.  The CFPB director is only removable “for cause” again. To quote another classic from the Allmans, “Lord, Lord, it’s all the same.”

Appreciate you all staying in the loop,



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