October 31, 2020

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Can the CFPB Director Be Removed at Will? DC Circuit Orders Rehearing En Banc

As we previously reported, a three-judge panel of the US Court of Appeals for the DC Circuit held in October 2016 that the Consumer Financial Protection Bureau (CFPB) was unconstitutionally structured in that too much authority is concentrated in its unitary director. In turn, the panel struck language in the Dodd-Frank Wall Street Reform and Consumer Protection Act that would only permit the US president to remove the CFPB director for cause—thereby permitting the president to remove the director without cause as he would any non-career “political” appointee.

The CFPB subsequently petitioned for en banc review; the court has granted that petition for review and ordered further briefing and a hearing before the full DC Circuit on May 24, 2017.

In the meantime, the October panel decision has been vacated, which means that (i) the CFPB will continue operating as it did before the October decision was filed and (ii) the CFPB director will continue, for the time being, to be removable only for “cause.”

We have discussed the implications of this case in depth (see our post here) in light of the recent change in the US presidential administration. It is, of course, too soon to predict the ultimate outcome of this matter or how the administration will react to this latest development.

Copyright © 2020 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VII, Number 48



About this Author

Nicholas Gess, Government and regulatory attorney, Morgan Lewis
Of Counsel

Nicholas M. Gess counsels on state and federal government enforcement and regulatory actions and their impact on business. He advises corporate clients on how to achieve results with governmental agencies and how to manage the risks of government action, particularly in the current environment where state enforcement authorities conduct parallel investigations with federal authorities such as the CFPB, DOJ, and FTC.

Charles Horn, financial services attorney, Morgan Lewis

Charles M. Horn is a partner in Morgan Lewis's Investment Management and Securities Industry Practice. Mr. Horn focuses his practice on regulatory and transactional matters, primarily in the areas of banking and financial services. He works on behalf of domestic and global financial institutions of all sizes on regulatory, supervisory, enforcement and compliance matters before all major federal financial institutions regulatory agencies, and leading state financial regulatory agencies.

Melissa R.H Hall, Financial services attorney, Morgan Lewis
Of counsel

Melissa R. H. Hall represents US and overseas banks, nonbank financial services companies, investors in financial services, and technology companies in regulatory and corporate matters. She advises them on a wide range of state and federal financial regulatory laws and regulations. She provides counsel on financial regulatory compliance and enforcement, including state and federal licensing requirements, consumer financial products and compliance, payment systems, corporate and transactional matters, financial institution investment and acquisition, and the development...

David Monteiro, Morgan Lewis, litigation attorney

David Monteiro focuses his practice on counseling companies facing government investigations and enforcement litigation. A former enforcement attorney with the Federal Trade Commission’s Bureau of Consumer Protection, Division of Financial Practices, David guides financial institutions and other companies in complying with state and federal consumer protection laws and regulations, responding to examinations and investigations, and defending litigation against the government.