The U.S. Court of Appeals for the District of Columbia Circuit finally ruled on the landmark case between the Consumer Financial Projection Bureau and PHH in favor of the CFPB. The decision significantly lengthens the timeline for knowing the fate of the bureau and its director, Richard Cordray.
The ruling moved to allow the embattled agency to defend the constitutionality of its leadership structure, which is an issue that spans far beyond the court case.
Besides the outcome of the case, the CFPB currently has three possible outcomes at play that involve an act of Congress, seen here, here and here, to change its structure.
Alan Kaplinsky, partner and leader of Ballard Spahr’s Consumer Financial Services Group, explained in an interview what the likely fate of the CFPB will be, and talked about the chances of Cordray’s term at the CFPB ending before this is all resolved.
As it stands, Cordray’s term expires in July 2018, allowing President Donald Trump to appoint a new director of his choosing. This route completely eliminates any say that the Democrats will have in choosing the next director.
Kaplinsky said the ruling makes it tougher for Trump to fire Codray and more likely that Cordray will be there until some kind of legislative compromise is worked out between the Democrats and the Republicans on the future of the bureau.
Under the current law, the president may remove the director for “inefficiency, neglect of duty, or malfeasance in office.”
Since Cordray’s term is set to expire in a little more than a year and given the elongated timeline of the PHH case, Kaplinsky said it’s unlikely “the Democrats would what to suffer through five years of having a Trump appointee run the bureau.”
Instead, Kaplinsky said there’s incentive for the Democrats to agree on the Republican-led bill that would replace the single director of the CFPB with a five-member bipartisan committee, a change the Republican Party has long pushed for.
At the beginning of Febraury, Sens. Deb Fischer, R-Nebraska; John Barrasso, R-Wyoming; and Ron Johnson, R-Wisconsin, introduced the bill.
And this is actually the third version of this bill, which Fischer introduced in each of the previous two congressional sessions to no avail. Even if either of those previous versions of the bill had passed out of Senate, President Obama would almost certainly have vetoed the bill.
Kaplinsky said he believes this is what’s most likely going to happen, even though the Democrats are saying they aren’t willing to compromise.
