Oh well, it’s on to the Supreme Court hopefully.
Yesterday the Court of Appeals for the District of Columbia put the dreams of constitutional extremists like myself on hold when it ruled that the single director structure of the CFPB was constitutional. The decision means that the Director can still only be removed for cause by the President.
But the decision by an “en banc panel” of the Court was by no means a complete victory for the Bureau. The panel effectively held that former Director Cordray overstepped his powers when he increased from $6 Million to $109 Million, a fine imposed on PHH for violating RESPA. It was this excessive fine which triggered the litigation in the first place.
Let’s take a trip down memory lane. PHH, like many large lenders, owns a captive mortgage insurance company. In 2014, the CFPB brought charges against PHH and its captive reinsurer, Atrium. It claimed that the money transferred to PHH through Atrium violated RESPA because a company was not being paid for services being performed or was being paid in amounts that “grossly exceeded” the value of its services. Ultimately PHH contested this finding in an administrative law proceeding and it was this finding and Director Cordray’s fine which triggered this litigation.
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