Appeals Court CFPB Reversal Charts Course for Supreme Court

CFPB Drops Investigation Against World Finance

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The case had been brought byPHH Corp., which argued the bureau's setup was unconstitutional because it put too much power in a single director, and that the CFPB misapplied RESPA law.

"Applying binding Supreme Court precedent, we see no constitutional defect in the statute preventing the president from firing the CFPB director without cause".

"The Supreme Court's removal-power decisions have, for more than 80 years, upheld ordinary for-cause protections of the heads of independent agencies, including financial regulators".

Financial industry leaders, hoping for an end to the Consumer Financial Protection Bureau - or at least the weakening of its regulatory power - through a long-running court case have to wait a while longer.

In the case, CFPB opponents challenged a provision of the 2010 Dodd-Frank financial overhaul legislation allowing the CFPB director to be removed only "for cause" - such as neglect of duty - and not over political differences. "We have no warrant here to invalidate such a time-tested course".

Asked for reaction to the ruling, a CFPB spokesman said, "We are analyzing the decision".

When the bureau's first director, Richard Cordray, resigned this past November, just months his five-year term was set to expire, Trump thwarted an attempt by Cordray to hand the agency's reigns to his deputy, Leandra English.

"This is a positive for PHH Corp., as the reinstatement of the appeals court decision should dramatically reduce - if not completely eliminate - the company's enforcement liability for mortgage reinsurance deals", wrote Jaret Seiberg, an analyst at Cowen Washington Research Group.

The results were similarly mixed for other key players. Much to talk about here, more than can be said in a quick Twitter feed.

"The fact that there is a separate appeal on an expedited schedule makes it hard for Mulvaney [or the DOJ] to appeal to the Supreme Court without jeopardizing his credibility in the Leandra English case", said Jennifer Lee, a partner at Dorsey & Whitney.

Maybe. Attorney Alan S. Kaplinsky of Ballard Spahr LLP doubted there will be a further appeal.

The court said the CFPB had violated due process by not providing PHH with notice of its new interpretation of Respa.

Banking industry lobbyists and right-wing think tank scholars had been among those who signed friend of the court briefings urging judges to change the CFPB structure.

"Even though I have total confidence in Acting Director Mulvaney's vision, the fact remains that no one person in America - especially someone who is unelected - should have the authority to unilaterally control whether working Americans can get a mortgage or a checking account", he continued.

"The bigger news for settlement service providers is that the en banc court reinstated the three-panel Circuit Court opinion that Section 8 (c)(2) is indeed an exemption from the anti-kickback prohibitions of Section 8 (a) of RESPA provided reasonable payments are made in return for services actually performed or goods actually furnished", Mayer Brown Partner Phillip Schulman told RESPA News. In an unusual turn, the Trump Justice Department opposed the agency within its own government in the case and could be expected to appeal the latest decision.

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