Questions of CFPB Constitutionality Won’t End With Cordray

CFPB’s Constitutionality Question Doesn’t End With Cordray’s Departure
– American Banker

Manatt’s Richard Gottlieb, co-chair of the firm’s financial services group, was quoted by American Banker in an article discussing a potential legal showdown between the Consumer Financial Protection Bureau and President Donald Trump following former director Richard Cordray’s resignation.

There are questions surrounding the president’s authority to fire the head of an independent agency, but a ruling in PHH v. CFPB could have an impact on Trump’s interim and final picks to lead the CFPB. In 2014, PHH Mortgage sued the CFPB when Cordray threw out an initial order for the lender to pay a $6.4 million penalty for allegedly taking illegal kickbacks for mortgage referrals. Cordray instead ordered the company to pay $109 million.

Depending on how the case plays out, it could help or hurt the administration’s efforts to control the CFPB and resolve key questions about the agency’s structure and powers.

Gottlieb told the publication that he thinks the U.S. Court of Appeals, D.C. Circuit could exercise restraint and rule on procedural grounds in favor of PHH without touching the larger issue.

“I expect a ruling that does not reach the constitutional issues,” Gottlieb said.