In an amicus brief filed in the case of PHH Mortgage v. Consumer Financial Protection Bureau on Friday, the Department of Justice reversed its position on the constitutionality of the CFPB’s structure, asserting that the Bureau’s structure with a single director removable only “for cause” should be invalidated.
This anticipated move by the Trump administration is the latest development in this closely watched case, which arose in 2015, when Cordray overruled an administrative law judge’s recommendation for a $6.5 million fine against mortgage lender PHH for allegedly requiring unlawful kickbacks from mortgage insurers in violation of the Real Estate Settlement Procedures Act.
Last month, the full D.C. Circuit Court of Appeals agreed to hear the case, vacating an earlier ruling by a three-judge D.C. Circuit panel finding the structure unconstitutional and allowing the director’s removal not just “for cause” but at the president’s discretion—thus preventing President Trump from removing current director Richard Cordray before his term expires in 2018. Oral arguments in the “en banc” review of the case will be heard by the D.C. Circuit on May 24. ABA will continue to monitor the case as it progresses.