The Washington, DC, federal appeals court vacated an earlier ruling against the Consumer Financial Protection Bureau on Thursday and agreed to re-hear the case that challenges its constitutionality - increasing the odds that the agency's director, Richard Cordray, a thorn in the side of Wall Street, could maintain his post until next year.
The banking industry has viewed the bureau, which was proposed by Elizabeth Warren before she became a senator from MA, as a thorn in its side and accused it of overreaching in its regulation of consumer financial activities.
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. Trump had promised during his campaign to dismantle the 2010 law that created the bureau in response to the financial crisis that struck in 2008.
Also weighing in on behalf of the CFPB are Americans for Financial Reform, the Consumer Federation of America, the U.S. Public Interest Research Group and one of the bureau's biggest proponents, Democratic Senator Elizabeth Warren of MA. The court struck down a part of the Dodd-Frank Act that said the US president could remove the CFPB director only "for cause", essentially allowing the president to fire the head of the agency at will.
Richard Hunt, president and chief executive of the Consumer Bankers Association, a group pushing for a commission structure, said in a statement that the decision "only creates further uncertainty regarding the constitutionality of the CFPB". His term doesn't expire until 2018.
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.
As the agency's director, Cordray exercises more power than would be the case with a five-member commission, which is often the structure atop independent federal agencies. Three days later, the ranking Democratic Party members of the U.S. Senate Banking and House of Representatives Financial Services committees sought to do the same, giving the agency another layer of advocacy if the Trump administration abandons its defense. The bureau says that over five years it has recovered $11.7 billion that it returned to more than 27 million harmed consumers. The decision was stayed pending appeal for a review by all 10 judges.
The three-judge panel had found the CFPB was "unconstitutionally structured".
A bureau spokeswoman did not immediately respond to a request for comment.