Federal judge strikes down CFPB structure
The decision is throwing uncertainty into the agency's future.
A federal judge in New York ruled Thursday that the makeup of the CFPB violates the constitution because it is governed by a single director who only can be removed by the president for cause.
The ruling conflicts with a January ruling by the District of Columbia Circuit Court of Appeals, which ruled that the agency’s structure of having one director, who may only be removed for cause, is not unconstitutional. That ruling came in a lawsuit filed by PHH, a mortgage company.
The New York ruling throws even more uncertainty into the future of the CFPB. It only covers the Southern District of New York.
But the New York decision could lead to more lawsuits being filed challenging the constitutionality of the agency, according to Jeff Sovern, a law professor at the St. John’s University Law School. He wrote in a consumer law blog sponsored by Public Citizen that the constitutionality of the agency may end up before the U.S. Supreme Court.
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