A court in Washington DC has ruled that the structure of The Consumer Financial Protection Bureau (CFPB) is unconstitutional. Unlike other federal agencies, the CFPB is headed by a single chair who cannot be removed at the President’s discretion. Federal regulatory agencies are usually headed by three to five commissioners that work together to run the agency or by a single commissioner that can be removed by the president.
Two of the three judges on the appeals panel agreed that too much unchecked authority had been given to the CFPB Director relative to other agencies. The judgement states: “The director enjoys significantly more unilateral power than any single member of any other independent agency. By ‘unilateral power,’ we mean power that is not checked by the President or by other colleagues.”
The court ruled that the director’s job could now be supervised or changed by the president at any time. The mission of the CFPB is to “make consumer financial markets work for consumers, responsible providers, and the economy as a whole. We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law. We arm people with the information, steps, and tools that they need to make smart financial decisions.” The CFPB has recently been thought of as a regulatory agency that will play a large role in the future of the telemarketing industry. It is always nice to see a large agency like this be checked by the courts.