Consumer Financial Protection Bureau building in Washington, D.C. Photo by Diego M. Radzinschi
The 9th Circuit Court of Appeals on Monday became the latest court to find that the single-director structure of the CFPB is constitutional.
The court ruled that the structure of the CFPB does not usurp the executive power of the president, who can only remove the director for cause.
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Conservatives, the Trump Administration and several companies impacted by agency enforcement actions have argued that in Dodd-Frank, Congress gave the CFPB director too much power since the director can only be removed for cause.
In the 9th Circuit case, the CFPB issued a Civil Investigative Demand to Selia Law, a law firm that offers a variety of legal services, including debt relief.
The appellate court said that several other courts have upheld the constitutionality of the CFPB. In addition, the U.S. Supreme Court has declined to take up a case challenging the agency's structure.
However, the Fifth Circuit Court of Appeals has ruled that the FHFA's structure is unconstitutional; that agency has the same structure as the CFPB.
Credit union trade groups have argued that Congress should change the structure, converting it into a commission.
In recent days, Democrats on Capitol Hill also have introduced legislation that would have an impact on CFPB activities.
Sen. Richard Durbin (D-Ill.) last week reintroduced legislation that would establish a maximum 36% APR cap for all open-end and closed-end consumer credit transactions, including payday loans.
That is the same rate as loans under the Military Lending Act but is higher than the 28% under the NCUA's Payday Alternative Loan program model.
The CFPB is considering changes to its strict payday lending rule, including the removal of a requirement that borrowers demonstrate an ability to repay the loan before the money is loaned.
Also, Sen. Kirsten Gillibrand (D-N.Y.) and Rep. Jesús García (D-Ill.) have introduced legislation that would require lenders to collect more detailed information about which applicants have been approved or denied credit.
In introducing the legislation, the lawmakers said that would allow the CFPB to determine if discriminatory practices prohibited under law have occurred.
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