An en banc panel of the Court of Appeals for the D.C. Circuit ruled that the current single-member structure of the Consumer Financial Protection Bureau ("CFPB") is constitutional. The 7-3 majority ruling overturns a 2016 ruling that the structure of the agency – providing for a five-year term for the Director, and allowing the President to remove the Director only for cause – violates the Constitution's separation of powers.
In reversing the decision, Judge Cornelia Pillard, writing for the Court, held that the "for-cause" provision is "consistent with the President's constitutional authority" and supports the ability of the CFPB to exist as an independent agency with a single director unable to be removed at will by the President. By permitting the President to remove a Director for "inefficiency, neglect, or malfeasance in office," the Court found that the structure of the agency provides the President with "ample tools to ensure the faithful execution of the laws." In addition, the Court determined that the CFPB structure is consistent with that of other federal regulators, and stated that a ruling that would find its structure and removal procedures unconstitutional would jeopardize the standing of other agencies that have "been permissibly afforded a degree of independence."
The Court found no precedential or historical support for challenges to the CFPB structure, finding that Congress "may appropriately give some limited independence to certain financial regulators." The Court held that the consolidation of the CFPB's regulatory authority actually may contribute to, rather than detract from, the President's ability to oversee the execution of consumer protection laws. With regard to all of the challenges to the CFPB's degree of regulatory independence, the Court determined that there is "no constitutional defect in the statute preventing the President from firing the CFPB Director without cause," and that no objection to the framework indicates that the single-member structure is unconstitutional.
In a dissenting opinion, Judge Karen LeCraft Henderson argued that the CFPB "does not meaningfully answer for its policies to either of the elected branches." She contended that the Court's decision signifies a "major defeat" for Article II of the Constitution. Judges Brett Kavanaugh and A. Raymond Randolph joined in a second dissenting opinion, claiming that "independent agencies collectively constitute . . . a headless fourth branch of government," and represent a "significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances."
On October 11, 2016, the U.S. Court of Appeals for the D.C. Circuit ruled that a CFPB interpretation of provisions of the Real Estate Settlement Procedures Act "violated bedrock principles of due process," and that the organizational structure of the CFPB violated Article II of the constitution.
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