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PHH Corporation, et al. v. Consumer Financial Protection Bureau (D.C. Cir.)

READ CAC’S EN BANC BRIEF AND MOTION FOR EN BANC RECONSIDERATION OF THE PANEL'S DENIAL OF MOTION TO INTERVENE IN PHH Corporation, et al. v. Consumer Financial Protection Bureau

PHH Corporation, et al. v. Consumer Financial Protection Bureau involves a challenge to the leadership structure of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), an agency created by the 2010 Dodd-Frank Act to end the longstanding fragmentation of responsibility for consumer financial protection that contributed greatly to the 2008 financial crisis.

After months of evaluating the roots of what is now known as the Great Recession and assessing the types of reforms needed, lawmakers concluded that a major culprit was the failure of a fragmented and unaccountable consumer financial protection regime to safeguard homeowners from reckless financial products. To remedy this, Congress established a new and consolidated entity, the Consumer Financial Protection Bureau, that would have the independence, resources, and mission focus needed to prevent a recurrence of those problems and respond to the challenges of an evolving financial marketplace. In an effort to insulate the CFPB from political influence that could impede its efficacy, Congress structured the Bureau so that is has a single director who could be removed only for cause.

On October 11, 2016, the United States Court of Appeals for the D.C. Circuit held, in a 2-1 decision, that the CFPB’s leadership structure is unconstitutional and severed the for-cause removal provision, holding that the director must be removable “at will” by the President. On November 18, 2016, the CFPB filed a petition in the Court of Appeals asking the full court to rehear the case en banc.  On November 25, 2016, the D.C. Circuit called for a response to the en banc petition.

On November 30, 2016, CAC filed a motion for an invitation to file an amici curiae brief in support of the CFPB’s petition for rehearing en banc on behalf of current and former members of Congress who were sponsors of the Dodd-Frank legislation. Our brief first argues that en banc review is warranted because the panel restructured a government agency in a way that directly conflicts with Congress’s legislative plan. In structuring the CFPB, Congress conferred leadership on a single director removable for cause — “inefficiency, neglect of duty, or malfeasance in office” — to ensure that the Bureau could effectively fulfill its role. Among other things, the for-cause removal provision ensures that Bureau experts have the political independence necessary to regulate effectively. Our brief also argues that en banc review is appropriate because the panel’s opinion is at odds with the text and history of the Constitution, as well as longstanding Supreme Court precedent. As we explain, the Constitution gives Congress considerable discretion in determining how to structure the federal government. Moreover, the Supreme Court has long recognized that Congress may choose to shield the heads of independent regulatory agencies from presidential removal at will.

On January 26, 2017, CAC filed a motion for leave to intervene on behalf of Senator Sherrod Brown and Representative Maxine Waters, Ranking Members of the Senate Banking Committee and House Financial Services Committee, respectively.  Sen. Brown and Rep. Waters helped to draft, and voted for, the Dodd-Frank legislation.  Our motion argues that Sen. Brown and Rep. Waters should be permitted to intervene given that their interests in a defense of the CFPB’s constitutional structure may no longer be adequately represented by the new Administration.  As the motion explains, absent intervention, it is possible that the panel’s decision will be insulated from review, thus nullifying movants’ votes to establish the CFPB as an independent agency and their ability to establish similar independent agencies in the future.

On February 2, 2017, the three-judge panel that issued the October decision denied, with no explanation, CAC’s motion to intervene on behalf of Senator Sherrod Brown and Representative Maxine Waters, along with separate motions filed by two other groups of putative intervenors.

On February 13, 2017, CAC filed a motion for en banc reconsideration of the court’s denial of our motion to intervene, arguing that intervention is needed to ensure that the court’s significant constitutional ruling is fully reviewed by the judiciary.  The D.C. Circuit denied our motion on March 8, 2017, along with separate motions filed by two other groups of putative intervenors.

On February 16, 2017, the D.C. Circuit granted CFPB’s petition for rehearing en banc. Briefs before the en banc court will be filed in late winter or early spring, and the court will hear oral argument on May 24.

Briefs filed by CAC