Cordray's Future May Be Decided in Courts
Many things are muddled in our nation's capital these days, but the future of the CFPB is more muddled than most.
Will Congress neuter the agency?
Will Director Richard Cordray resign to run for governor of Ohio?
Will President Trump fire Cordray if the director doesn't leave?
Those are just three of a myriad of questions about the CFPB.
Is the picture any clearer when we move to the federal courts?
Not a chance.
An even higher-stakes battle over the agency continues in courts around the country, where the ultimate existence of the agency as we now know it may be decided.
The best-known legal challenge of the agency remains pending in the U.S. Court of Appeals for the District of Columbia, where PHH, a mortgage company, challenged the constitutionality of the agency's makeup.
A panel of judges has ruled that the agency's makeup is unconstitutional since its director may only be fired by the president for cause.
That didn't settle the matter, of course, since the agency asked the full appeals court to consider the measure. The court has heard oral arguments, but hasn't ruled yet.
And then there's Pennsylvania.
A federal court in the middle district of the Keystone State ruled earlier this month that there are “no constitutional defects” with the structure of the agency.
In January, the CFPB filed suit against Navient, a humongous student loan servicer, alleging a variety of misdeeds. Navient asked that the suit be dismissed because – among other reasons – the CFPB didn't have the power to file it because the makeup of the agency was unconstitutional and because it was funded outside the appropriations process.
Not so, said U.S. District Judge Robert Mariani, who mentioned the D.C. appellate court case but noted the full appeals court hasn't issued a decision yet.
The judge said there are several regulatory agencies that are funded outside the appropriations process. And he said that because the agency is headed by one person, it is more accountable to the president than an agency governed by a board.
Moving down Interstate 95 to the Southern District of Florida, the CFPB has filed a complaint against Ocwen Financial Services for various alleged bad things.
And, you guessed it. Ocwen wants the case dismissed, arguing that the makeup of the CFPB is unconstitutional.
But there's a wrinkle in this case. A couple weeks ago, Kenneth Marra invited Attorney General Jeff Sessions to weigh in on the case.
Now, the Justice Department under former President Obama supported the CFPB's makeup. After all, Obama signed the Dodd-Frank Act, which created the agency.
But the Trump Administration hates the agency and has already filed a brief supporting PHH. The agency hasn't filed a brief in the Florida case yet.
So, to re-cap, we’ve got a panel of appellate judges saying the makeup of the CFPB is unconstitutional, a district court that disagrees and a Florida judge who has opened a new can of worms by inviting the Justice Department to weigh in.
As they say, “stay tuned.”
Not on Your Life
Back in March, Sen. Mike Rounds (R-S.D.), a supporter of efforts to overhaul Dodd-Frank, asked the American Bankers Association to play nice with their brothers and sisters who run credit unions.
The senator reasoned that if the bankers abandoned their efforts to convince Congress to yank the credit union tax exemption, the institutions could join sides and fight for the regulatory changes they agree on.
How successful has Rounds been?
Well, let's see. The Independent Community Bankers of America continues to identify the repeal of the tax exemption as one of its top priorities.
Bankers have appealed to the Trump Administration on several different fronts to support a tax reform provision to eliminate the tax exemption.
And just this month, the ICBA has told the House Financial Services Committee that the $1.1 billion in legal fees the NCUA has paid in connection with the recovery of billions more from the failed corporate credit unions is evidence of “rank incompetency.”
So, has Rounds been successful?
Will the Arbitration Rule Survive?
Shortly before leaving for its August Recess, the House approved a resolution that would nullify the CFPB's controversial rule that requires financial companies to allow their customers the option to join class action lawsuits against them.
The Senate didn't vote on the resolution, with supporters saying they would consider it when they return after Labor Day.
Republican opponents of the rule are using the Congressional Review Act to attempt to nullify the regulation. Normally, such a controversial move would require 60 votes in the Senate – a likely impossible hurdle to clear.
But a challenge under the Congressional Review Act requires only 51 votes to pass.
But as it turns out, even that might be a hurdle too high. The word is that several Republican senators remain undecided on the challenge and Democrats are not likely to support it. And Sen. John McCain (R-Ariz.) may not be available to cast a vote since he will be undergoing cancer treatment in his home state.
As they say, “don't count your chickens …”
David Baumann is a Correspondent-at-Large for CU Times. He can be reached at email@example.com.