With the Trump administration poised to move in to the White House on January 20th regulatory changes in the financial sector are expected. However, the current controversy surrounding the Consumer Financial Protection Bureau has nothing to do with the President Elect. The CFPB has been under fire since its creation for having too much power over the financial sector, but not everyone feels that way. Michael Calhoun, president of the Center for Responsible Lending, wrote an article for The Hill in defense of the bureau stating

“In its five years as an agency, the CFPB has recovered more than $11 billion for 27 million consumers harmed by illegal practices of financial institutions. The bureau has secured relief in more than 100 cases, directly putting money back in the pockets of American consumers who have been victimized by companies that refuse to follow the law.”

 But there are still many concerns regarding internal affairs at the CFPB. In the fall of 2015 three judges of the D.C Court of Appeals unanimously agreed that the CFPB’s internal structure gives too much control to current director Richard Cordray. Because of this purported imbalance of power, the court labeled the CFPB as unconstitutional, and 103 million dollars of a 6 million dollar fine against PHH (a financial services company) was vacated.

Consequently, the CFPB has lost its autonomy and must operate as an Executive agency. This means that the President of the United States now has the authority to supervise and preside over the Director of the bureau, or remove him from the position entirely. In response, the CFPB has filed for the case to be reheard by the entire D.C Court of Appeals, rather than just three judges. It is unclear at this time how the legal battle between the CFPB and PHH will turn out, but what is clear is that when President Trump takes office he is expected to act quickly when it comes to reorganization of the CFPB. Whether you support the CFPB or not, the outcome of this case will have widely felt ramifications for the financial sector. 


By: Christine Belsuko