Former Counsel Offers Opinion on CFPB Structure, While D.C. Court Denies AG Group's Bid to Intervene

In an opinion post in The Hill last week, former managing counsel and lead of the debt collection rulemaking team at the CFPB, Tom Pahl, offers insight on how the determination of new leadership at the bureau will wind through all branches of government. He concludes with this suggestion,

Perhaps it would be in the long-term interest of consumer protection to restructure the CFPB as a bipartisan, multimember commission that is less controversial and more transparent, deliberative, and centered.

The article is worth a read, as Pahl specifically references debt collection rulemaking.

Additionally, a the Wall Street Journal (note: registration required) reported today that the Trump Administration suggested it would seek change at the CFPB by changing its personnel. In an interview the Journal conducted with Gary Cohn, Director of the White House National Economic Council, he said "personnel is policy."

insideARM has published extensively about the question of whether CFPB Director Richard Cordray will continue to lead the bureau in the short term. His five year term expires in July 2018, but many have speculated that President Trump will replace him now.  One player in the saga is the D.C. Circuit. In October 2016 in the case of PHH v. CFPB, the D.C. court ruled that the single-director-removable-only-for-cause structure violates the U.S. Constitution’s separation of powers.

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PHH, a mortgage company in Mount Laurel, N.J., wanted the U.S. Court of Appeals for the District of Columbia Circuit to vacate a June 2015 enforcement ruling by the CFPB that said PHH violated anti-kickback provisions in Section 8(a) of the Real Estate Settlement Procedures Act (RESPA) and had to give up $109 million in what CFPB Director Cordray had said were ill-gotten mortgage reinsurance premiums. Among other issues, the case called into question the CFPB’s structure and authority.

The CFPB has petitioned for a rehearing en banc in the case.

Editor’s Note: In the Court of Appeals many cases are originally decided by a panel of 3 Judges. That is what occurred in this case. After the panel has heard the appeal and issued its opinion, either party to the appeal may choose to request another hearing “en banc” in most appeals courts.  This request asks the court to hear the case again, this time with all of the court’s judges listening to the case.

Late last month, a motion to intervene was filed with the D.C. Circuit by the Democratic Attorneys General of 16 states and the District of Columbia, as well as several consumer groups.  PHH argued that the motion should be denied. 

Yesterday, the D.C. Circuit did in fact deny that petition.