A ruling by the U.S. Court of Appeals for the D.C. Circuit [1] on Thursday stated that the full Court will take another look at a ruling that struck down the Consumer Financial Protection Bureau (CFPB). This action sets the stage for a legal fight that carries significant implications for the future of the CFPB in the era of the Trump administration.
In addition to granting the CFPB’s petition, the court also ordered that the three-judge panel’s ruling this past October be vacated and that oral arguments will be heard May 24.
The D.C. Circuit’s decision gives the CFPB another chance to defend itself as Republicans in Congress, push to roll back the agency’s authority.
Sen. Ted Cruz (R-Texas) filed a bill this week to abolish the agency as other Republicans continued their legislative push to turn the CFPB into a bipartisan commission.
According to the National Association of Federal Credit Unions (NAFCU), the CFPB argued against the court’s decision on grounds that it would interfere with Congress’s ability to create independent agencies led by a single director. The CFPB pointed to other independent agencies, including the Social Security Administration, the Federal Housing Finance Agency and Office of Special Counsel, to help make its case.
Republican Jeb Hensarling, chairman of the House Financial Services Committee, said the ruling will not affect his intentions on restructuring the CFPB.
"The court's decision to grant another hearing, while not unexpected, has no bearing on the president's ample authority to remove CFPB Director Cordray from office," he said. "I encourage President Trump to take immediate action to uphold the Constitution by reining in this unconstitutional and out-of-control agency.”
One of the nation’s foremost experts on regulatory reform, Joseph Lynyak III of Dorsey & Whitney, says that today’s ruling “puts the previous statutory determination favorable to PHH on hold.” He also pointed out that since the time frame for submitting briefs in late May, a decision will probably not be issued until late next summer at best.
In the meantime, it seems that CFPB will be allowed to function as originally intended while everyone waits for the outcome of the court’s ruling next summer.