Congress created the CFPB after the 2008 financial crash to protect consumers from what were seen as predatory and deceptive practices by financial institutions.
UPDATE: May 16, 2024 – Consumer Financial Protection Bureau’s Funding is constitutional. This is great news for all consumers who need an agency with the power to look out for their interests.
Consumer Financial Protection Bureau et al v. Community Financial Services Association of America, US Supreme Court Held: Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause. The statute that authorizes the Bureau to draw money from the combined earnings of the Federal Reserve System to carry out its duties satisfies the Appropriations Clause. Accordingly, we reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
It is so ordered.
The question – can a President remove the Director of Consumer Financial Protection Bureau (CFPB) ‘just because’?
The answer – yes. But then it gets a little more complicated. The bottom line – The director of the CFPB is exposed to the whim of a president who wants everyone to do their bidding, no matter the consequences to the consumer. If the president cares about you and me more than big business, that is good. But, if the president cares more about big business than you and me, that is bad. The goods news – despite Trump’s best efforts the CFPB is still alive and kicking. For those late to the party – the CFPB is one of the few organizations designed to protect you and me (the consumer).
The CFPB core functions:
According to the CFPB website, the CFPB was created to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. Before, that responsibility was divided among several agencies. Today, it’s our primary focus.
Our work includes:
- Rooting out unfair, deceptive, or abusive acts or practices by writing rules, supervising companies, and enforcing the law
- Enforcing laws that outlaw discrimination in consumer finance
- Taking consumer complaints
- Enhancing financial education
- Researching the consumer experience of using financial products
- Monitoring financial markets for new risks to consumers
Sheila Law v. CFPB: Winners and Losers (a reprint from Credit Slips) July, 2020
posted by Adam Levitin (see some great quotes at the end of Mr. Levitin’s entire post – ‘Read More’)
The Supreme Court’s long-awaited decision about the CFPB’s constitutionality is out. It’s a tricky opinion to parse politically. The Court, in a 5-4 partisan decision, held that the CFPB’s structure violates the separation of powers because of the for-cause only removal provision for the CFPB Director in conjunction with the Bureau’s other features. Accordingly, the Court found that the Director must be removable at will. Here’s my attempt to lay out the winners and losers. As you’ll see, they do not track with the headlines of the CFPB losing—the CFPB was actually the winner here for most purposes.
Winner: The CFPB
The CFPB walks away from Seila Law still standing tall and able to do everything it could the day before the decision. Don’t lose sight of that. You can see this in part by counting the votes. While it was 5-4 (with conservatives in the majority) that the CFPB is unconstitutional, it was 5-4 (liberals + Roberts) on the severability issue, which keeps the agency alive. While the case was a tactical loss for the CFPB, it was actually a strategic victory. If there’s one big picture take away, that’s it. The CFPB functionally won here.
Winner: A Biden Administration
The most immediate practical effect of the decision is that a President Biden can fire CFPB Director Kraninger on Day One of his administration. That’s a good thing for those who want to see a more active CFPB right now. In the short term, the Supreme Court might have given a Biden administration a real gift. Indeed, I found it very strange to see the Kraninger CFPB send out an email scheduling an event for March 2021. That might be optimistic in light of the decision.
Possible Loser: CFPB Independence
While the CFPB did score a general win, the decision might affect how the CFPB behaves in the future. The lack of a for-cause-only removal protection might have a chilling effect on future CFPB Directors. If a future CFPB Director is too aggressive, the financial services industry will surely lobby the President to fire the Director. Whether the industry will have enough pull with a future administration to actually get a Director removed or for the White House to get involved is far from certain, however. In other words, the trade-off here is that there’s a possibility of putting in a more active Director in January 2020, but that such Director and any future Director will face a political constraint of some type going forward.
MUSINGS FROM DIANE:
Politics and politicians can be bullies. “Bullying is the use of force, coercion, or threat, to abuse, aggressively dominate or intimidate. The behavior is often repeated and habitual.” (Wikipedia). As soon as Trump got in the White House he started attacking the CFPB. Why you ask? Because he is not a champion of consumer rights (don’t trust me – look at his history). The CFPB was born out of a group, lead by Elizabeth Warren, who were tired of consumers (that you and me) getting ripped off by big business – such as banks, mortgage companies, credit card companies, payday lenders, shady student loan companies, etc. Richard Cordray was the first Director (under Obama), later, Trump put his own shills in as directors – Mick Mulvaney (as Acting Director), then Kathleen Kraninger.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
In Case You Missed It
Published On: July 3, 2024
The Consumer Financial Protection Bureau (CFPB) released a report delving into the hidden costs consumers are forced to pay for health savings accounts. May 1, 2024 The following is a reprint from CFPB's website (provided [...]
Published On: June 8, 2019
YOUR MORTGAGE CLOSING CHECKLIST By Melissa Yu – JUN 03, 2019, Consumer Financial Protection Bureau Closing is one of the most important stages of buying a house. Learn how to prepare and what to expect so you [...]
Published On: July 14, 2018
Company and Its Former CEO Engaged In Illegal Debt Collection Practices (Reprint from CFPB announcement 7/13/18) The Bureau of Consumer Financial Protection (Bureau) announced a settlement with National Credit Adjusters, LLC (NCA), a privately-held company [...]
Published On: June 8, 2018
He now crushes the voice of the only organization that tries to protect you and me as consumers. Mulvaney protecting payday lenders and banks. November, 2017 Trump appointed Mick Mulvaney as “acting” director [...]
