Consumer Watchdog In Trump's Crosshairs Gets A Chance To Keep Fighting

An appeals court will reconsider a major defeat for the Consumer Financial Protection Bureau.

A federal appeals court agreed Thursday to reconsider a decision that found the structure of the Consumer Financial Protection Bureau to be unconstitutional. It’s a reprieve of sorts for the watchdog agency created in the aftermath of the Wall Street financial crisis and now in the crosshairs of the Trump administration.

The full U.S. Court of Appeals for the D.C. Circuit will look at a divided panel ruling from October that said the independent agency’s single-director format violates the Constitution’s separation of powers. Thanks to that structure, the CFBP director, Richard Cordray, had been largely insulated from White House control.

But the panel ruling placed the agency under the president’s direct oversight. The CFPB had pleaded with the court to give that decision a second look shortly after President Donald Trump was elected.

Thursday’s order by the D.C. Circuit vacated the earlier ruling.

Citing the pending litigation, a CFPB spokesman declined to comment.

Consumer and civil rights advocates welcomed the development. Republicans, on the other hand, have not hidden their displeasure with the CFPB, which in recent years has levied critical sanctions on the likes of Wells Fargo and gone after payday lending and other financial practices that tend to harm more vulnerable consumers.

Sen. Ben Sasse (R-Neb.) called on Trump to fire Cordray in a USA Today editorial published earlier this month. The CFPB chief has “more power than just about anyone in Washington,” he argued.

This week Sen. Ted Cruz (R-Texas) introduced legislation to repeal the section of the 2010 Dodd-Frank financial reform law that created the consumer watchdog.

The D.C. Circuit’s move effectively forecloses the option of Trump firing Cordray, which means the fate of the CFPB will remain tied up in the judicial system. The appeals court set a hearing for May, and a future Supreme Court showdown remains a possibility.

Cordray has called the rhetoric against the CFPB “overheated” and has defended the agency’s mission to protect consumers, which he sees as a type of “law enforcement job.”

“That’s important because regular people don’t have the chance when they’re exploited out of ― it might be $10 or $20 or $50 ― they can’t go to court over that,” Cordray told MSNBC earlier this month. “They need someone to stand on their side and see that they’re treated fairly, and that’s the job that we’re doing.”

At one point, Trump was eyeing former Rep. Randy Neugebauer (R-Texas), a longtime critic of the CFPB, to run the agency.

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