Trump administration wants freer hand to fire head of agency
WASHINGTON (AP) — The Trump administration is backing a court case that would make it easier for the president to fire the head of the government's consumer finance watchdog agency.
The Consumer Financial Protection Bureau has taken enforcement actions against many financial companies, angering the industry and Republican lawmakers, who accuse it of overreaching its authority.
Under the agency's current structure, its director can only be removed "for cause," such as neglect of duty, and not over political differences. An appeals court is scheduled to hear in May whether that is unconstitutional.
The Justice Department filed a legal brief with the court Friday arguing that the agency's structure violates the Constitution because it gives excessive power to its director, Richard Cordray. Cordray, a Democrat, was appointed by President Barack Obama to a five-year term that ends next year.
The department's action puts the administration at odds with the consumer agency, which is fighting in the case to defend its structure.
The full U.S. Court of Appeals for the District of Columbia agreed last month after an appeal from the agency to reconsider an earlier ruling by a three-judge panel that would have made it easier for Trump to fire Cordray.
That decision offered at least temporary job security for Cordray, who has been attacked by Republicans for his aggressive oversight of the banking industry. Some Republican lawmakers have publicly urged Trump to fire Cordray.
The divided three-judge panel ruled last year that the way the CFPB is organized violates the Constitution's separation of powers by limiting the president's ability to fire the agency director. That 2-1 ruling would have given Trump the power to dismiss Cordray for any reason.
As the agency's director, Cordray exercises more power than would be the case with a five-member commission, which is often the structure atop independent federal agencies. The members of such commissions normally are split between the political parties.
Under Cordray's leadership, the agency has taken action against banks, mortgage companies, credit card issuers, payday lenders, debt collectors and others. The CFPB says that over five years it has recovered $11.7 billion that it returned to more than 27 million harmed consumers.
The case before the appeals court involves allegations that New Jersey mortgage lender PHH Corp. was involved in a scheme to refer customers to certain mortgage insurance companies in exchange for illegal kickbacks. The CFPB ordered the company to repay $109 million in illegal payments it had received. PHH claimed its conduct was legal and challenged the agency's structure as unconstitutional.
The case will now be heard by a panel of 10 judges, six appointed by Democratic presidents and four appointed by Republicans. All three judges on the panel that issued the previous ruling were named by Republican presidents.