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The Department of Justice Changed Its Tune, What Now?

On Friday, the U.S Department of Justice (DOJ) turned against the CFPB, as the DOJ formally announced their support of PHH Corp in the case against the CFPB. The ongoing case and brief published by the DOJ has declared the CFPB leadership system unconstitutional, as the bureau’s single-director structure is in violation of the Constitution’s separation of powers clause. The 33 page brief from the DOJ focuses largely on President Trump’s power to replace the CFPB director.

"Limitations on the president’s authority to remove a single agency head are a recent development to which the executive branch has consistently objected," the Justice Department's brief said. "Under the Constitution and Supreme Court precedent, the general rule is that the president must have authority to remove executive branch agency heads at will."

With the new Republican administration, the Justice Department's opinion on the Bureau has shifted. "Because a single agency head is unchecked by the constraints of group decision-making among members appointed by different presidents, there is a greater risk that an 'independent' agency headed by a single person will engage in extreme departures from the president’s executive policy."

The Wall Street Journal reports that Justice Department lawyers have argued that the current structure of the CFPB are problematic, as it allows the presidency to remove the director only for negligence or malfeasance. The brief states that, instead, the president can remove the director at will.

“As this court recognized in calling for views of the United States on the question whether rehearing should be granted, the view of the United States on matters involving the president’s removal of power are not always congruent with the views of independent agencies,” a previous government motion stated.

"No other executive agency is so insulated from democratic accountability," wrote Brian Melendez, a managing partner at Dykema Gossett, representing the Association of Credit and Collection Professionals, a trade group for debt collectors.

Representative Jeb Hensarling stated “I applaud the Department of Justice for recognizing this unconstitutional CFPB must not stand and must not continue to harm the very consumers it is supposed to protect.” Previously, Hensarling had called the Bureau “arguably the most powerful and least accountable bureaucracy in American history.”  

Of course, not all groups agree with the decision to defend the president’s power. Allied Progress released the following statement from its Executive Director, Karl Frisch.

“Millions of Americans have felt the impact of Richard Cordray’s work as the Consumer Bureau’s director. Under his leadership, the CFPB has returned nearly $12 billion to 27 million Americans who have been wronged by credit card companies, payday lenders, debt collectors and other predatory financial industries. Director Cordray’s work is a cause for celebration, not dismissal.”

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