The structure of the Consumer Financial Protection Bureau (CFPB) is not constitutional, according to a ruling by a federal appeals court, which also sent back an enforcement action by the five-year-old agency against mortgage lender PHH Corp. for review.

The five-year-old agency violates the Constitution’s separation of powers because too much power is in the hands of its director, found the U.S. Court of Appeals for the District of Columbia Circuit. Giving the president the power to get rid of the CFPB’s director and to oversee the agency would fix the situation, the court said.

The court voted 2-1 in ruling that the CFPB could continue functioning, but must restructure how it runs within the executive branch. “The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury,” according to the ruling.

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