Industry NewsRegulations

Department of Justice flip-flops, withdraws support from CFPB in PHH case

A new brief filed by the DOJ urges the court to uphold the 'unconstitutional' CFPB ruling
  • Whether or not the president has the power to remove the Consumer Financial Protection Bureau's director has become a central issue in a case between the CFPB and mortgage lender PHH that began in 2014.
  • An appeals court ruled the CFPB's structure unconstitutional last fall, and the Department of Justice is no longer on the bureau's side.

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What does it look like when a federal department changes its mind? And if that department's opinion has been offered in an ongoing court case involving a federal agency -- what does that mean? This is the current scenario describing the Department of Justice's (DOJ's) stance toward the Consumer Financial Protection Bureau (CFPB), which is embroiled in a regulatory battle with mortgage lender PHH. That regulatory argument involves RESPA (the Real Estate Settlement Procedures Act) and how PHH managed its partnerships -- but how the CFPB is structured and whether or not the president has the power to remove the CFPB's director (and when the president can do so) has become a central issue to the case. Tomorrow, March 21, the House Financial Services Committee will hold a hearing titled "The Bureau of Consumer Financial Protection's (CFPB's) Unconstitutional Design" that will undoubtedly examine the president's ability to fire the bureau's director at will. The next oral argu...