Change in Washington May Have Turned the Tide Against the CFPB, But Does It Matter?
Sending what we believe is a signal that the Department of Justice (DOJ) will switch sides in the debate over whether the Consumer Financial Protection Bureau (CFPB) is constitutionally structured, the DOJ has filed a motion (Motion) seeking leave to file an amicus brief in PHH Corp., et al. v. CFPB.
As we have previously discussed (see developments here), a panel of the US Court of Appeals for the District of Columbia Circuit held that the CFPB is not constitutionally structured because it has a unitary director who may only be removed by the president for cause, and draws its funding from the Federal Reserve Bank and not by congressional appropriation. Rather than declare the removal-of-director provision invalid, however, the panel imposed the least intrusive remedy and struck the “for cause” clause of the removal provision, thereby rendering the director an ordinary noncareer—often referred to as “political”—appointee subject to termination at will.
The CFPB petitioned for rehearing. Because the CFPB has litigating authority independent of the executive branch, the court invited the DOJ to state its position. In a filing made prior to President Donald Trump’s inauguration, the DOJ supported the CFPB’s petition.
Thereafter, the court of appeals vacated the panel decision and granted an en banc hearing. Opening briefs are due for PHH on March 10 and for the CFPB on March 31, with PHH’s reply brief due on April 10.
In its Motion, the DOJ expressly seeks a filing date of March 17, 2017—after PHH’s opening brief is due—but notes that the March 17 deadline will afford the CFPB time to respond to any arguments the DOJ may make in its amicus brief.
This latest development sends a fairly clear message that if the acting solicitor general approves the DOJ’s filing of an amicus brief, the DOJ’s position will shift, from supporting the CFPB to holding at least a neutral position—likely supporting the panel’s holding, and possibly supporting PHH’s position that the CFPB’s structure is unconstitutional and the CFPB’s action cannot be cured.
As is the case with any attempt to read motives or outcomes of a purely procedural motion, our “take” on the DOJ’s Motion is based only on experience, and we will not know the true significance of the Motion until opening briefs are filed later this month.