US consumer agency survives latest legal challenge| MENAFN.COM

Saturday, 02 July 2022 10:46 GMT

US consumer agency survives latest legal challenge


(MENAFN- AFP)The embattled US Consumer Financial Protection Bureau, long a target of Republican lawmakers and industry, on Wednesday survived the latest round of legal efforts to curtail its powers.

A split panel of judges at a federal appeals court in Washington overruled an earlier decision, finding that Congress was within its powers in creating an independent agency whose head cannot be fired by the president.

The case had threatened a central pillar of the reforms enacted following the 2008 financial meltdown. The CFPB was created as part of the 2010 Dodd-Frank Wall Street reform legislation to protect consumers from abuses by banks, credit card companies, insurers and other financial services companies.

Unlike the CFPB, other independent agencies, such as the Securities and Exchange Commission and Federal Communications Commission, are controlled by bi-partisan panels.

In October 2016, a three-judge panel of conservative appeals judges had sided with PHH Corp, a New Jersey mortgage lender, finding that the president should be able to fire the CFPB director at any time for any reason, as he can do with cabinet members.

But, after a review by the full bench of the US Circuit Court of Appeals for the District of Columbia, the majority of judges rejected this view, finding that legal precedent had established Congress's right to create agencies independent of the president.

"Congress's decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will," US Circuit Judge Cornelia Pillard wrote for the majority.

The decision raises the possibility of an appeal before the Supreme Court.

The CFPB is also the center of a legal battle over who should be in charge of the agency, with Leandra English, a hand-picked successor to the previous director, Richard Cordray, arguing that President Donald Trump's appointee, Acting Director Mick Mulvaney, has no legal authority to control the agency.

Mulvaney, who is also White House budget director and a long-time critic of the CFPB, has announced efforts to overhaul the bureau to suit Republican preferences, and once described the agency as a "sick, sad joke" which restrains free commerce.

The CFPB most notably took action against the consumer lending giant Wells Fargo in 2016 over its fraudulent creation of millions of sham accounts without consumers' knowledge.

Supporters say the agency has returned millions of dollars to consumers harmed by predatory financial institutions.

Trump has hailed his administration's work to scrap regulations and unburden corporations from perceived excessive oversight.

MENAFN3101201801430000ID1096413753


Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.