…uphold the American idea of limited government, because Director Cordray has vigorously supported the unconstitutional independence of the CFPB and pursued a regulatory agenda that is harmful to the American people.
Trump would be able to take this action under the federal appellate ruling in PHH Mortgage v. CFPB, which invalidated the bureau’s leadership structure. Under the Dodd-Frank Act, the bureau director may be removed not at the president’s discretion but only “for cause,” a distinction that departs from historical practice and risks arbitrary decision-making and abuse of power, according to the court.
While PHH is being appealed, Sasse and Lee observed:
The president retains constitutional authority to remove the director until a valid court order says otherwise. The CFPB has issued regulations that have disproportionately burdened credit unions and community banks, proposed a payday lending rule that could reduce access to credit for average consumers, proposed an arbitration rule based on flawed research and advanced an overreaching regulatory agenda through enforcement actions instead of rulemakings.
Sasse – a Senate Banking Committee member – and Lee said that Cordray’s removal would be a “first marker” in a process rolling back the CFPB’s unprecedented powers. ABA has long supported a consumer protection agency led by a bipartisan, five-member commission to balance independence and accountability while broadening perspectives and promoting checks and balances. ABA continues to monitor the PHH case as the appeal proceeds.