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Wednesday, October 12, 2016

Court of Appeals Rules CFPB Single-Director Structure Unconstitutional

In a 2-1 decision, the U.S. Court of Appeals of the D.C. Circuit ruled that the CFPB’s single-director structure violates Article II of the Constitution. Article II assigns executive power to the President of the United States – one part of our nation’s system of checks and balances implemented to safeguard individual liberty.

The CFPB is an independent agency headed by a single director that was formed by Congress as part of the 2010 Dodd-Frank Act. Unlike an executive agency, the director of an independent agency can only be dismissed by the President for cause, not at will. The court decision argues, however, that independent agencies have “historically been headed by multiple commissioners, directors, or board members who act as checks on one another.”

“Because the CFPB is an independent agency headed by a single director and not by a multi-member commission, the director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. Government,” the court decision said.

The court has ruled that the bureau will now operate as an executive agency, which means “The President of the United States now has the power to supervise and direct the Director of the CFPB, and may remove the Director at will at any time.”

Read the court decision.

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