Monday, June 25, 2018

Judge Rules CFPB Structure Is Unconstitutional

A federal judge on June 21 ruled that the Consumer Financial Protection Bureau’s structure is unconstitutional.

Specifically, the judge noted that the existence of a single powerful director who cannot be removed at will by the president is unconstitutional.

In her decision, Judge Loretta Preska forbade the CFPB from pursuing its lawsuit -- which it filed together with the state of New York -- against New Jersey-based RD Legal Funding.

The lawsuit alleged that the company misled customers into entering cash advance agreements that functioned as usurious loans that were void under state law. She added that the New York attorney general would be permitted to proceed with its lawsuit independently.

Judge Preska’s ruling contradicts a ruling earlier this year by the D.C. Circuit Court of Appeals, which found in a complex ruling that the limitation on the president’s power to remove is consistent with Supreme Court rulings on other federal agencies, including the Federal Trade Commission and the Securities Exchange Commission.

Read the order.

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