First, the development surfaced that the Department of Justice filed an amicus brief — a legal document filed in appellate court cases by non-litigants with a strong interest in the subject matter — questioning the Consumer Financial Protection Bureau being overseen by a single director.
Turns out, that stance was concurred by a collection of 15 state attorneys general, led by Kansas attorney general Derek Schmidt. These attorneys general argue that there are “unprecedented efforts” to insulate the CFPB director’s decisions from review result in "essentially unchecked administrative powers", which is at odds with the Constitution’s command that all executive power be vested in the president.
Schmidt made those assertions to the U.S. Court of Appeals for the District of Columbia Circuit, which will be conducting a rehearing of a case in which the initial decision reached last October called the CFPB “unconstitutionally structured.” The case pit the regulator against PHH Corp., a Mount Laurel, N.J.-based finance company that operates in the mortgage space.
It involved a three-judge panel of the court, which ruled the CFPB’s structure was constitutionally flawed and that its director, who currently is Richard Cordray, should be removable at the will of the president.
The 15 attorneys general argue that the states have an interest in ensuring the division of power within the federal system to avoid unauthorized encroachment on state authority and also to secure individual liberty and the opportunity for citizens to participate actively in governance. The states included in the amicus brief were:
“The CFPB possesses the power to preempt or displace broad swaths of state regulatory authority,” the attorneys general wrote in their filing. “But the agency’s structure permits it to exercise this broad preemptive power without undertaking the careful deliberative processes that would be required of the elected branches of the federal government or of an independent agency headed by a multi-member board.
“Thus, the CFPB has a significantly reduced incentive to give proper weight to federalism interests than have the political branches or multi-member agencies,” they continued. “This reduced incentive increases the risk of federal agency encroachment on state prerogatives.”
The brief argues that the states have a direct interest in ensuring that the CFPB governance structure is accountable to democratically elected institutions.
A copy of the brief is available here.