On March 17, 2017, the U.S. Department of Justice filed a Brief for the United States as Amicus Curiae in PHH Corporation v. Consumer Financial Protection Bureau, 839 F.3d 1 (D.C. Cir. 2016), a case challenging the constitutionality of the CFPB’s single-director structure pending before the U.S. Court of Appeals for the District of Columbia Circuit. As discussed in a previous post, on February 17, 2017, the D.C. Circuit granted rehearing en banc and vacated the order of the three-judge panel striking down the CFPB’s structure as unconstitutional. The filing of the brief is timely, as en banc oral argument is scheduled for next Friday, March 24, 2017.

The United States limits its brief to the issue of whether the limitations on the President’s removal authority recognized by the U.S. Supreme Court in Humphrey’s Executor v. U.S., 295 U.S. 602 (1935), apply beyond multi-member regulatory commissions to an agency headed by a single Director. The Department of Justice explains “we do not agree with all of the reasoning” in the opinion of the three-judge panel, and its brief does not embrace the panel’s argument that the Bureau’s structure unconstitutionally impinges upon individual liberty. However, the United States supports the panel’s conclusion that single-headed agencies “are meaningfully different from the type of multi-member regulatory commission” addressed in Humphrey’s Executor. The United States thus urges the Court to strike down the Dodd-Frank Act’s for-cause removal provision, see 12 U.S.C. § 5491(c)(3), by finding that the single-Director CFPB violates the separation of powers under Article II of the Constitution. An earlier Department of Justice brief in this case, filed by the Obama Administration, had criticized the panel’s constitutional analysis.

Importantly, the United States concedes that the proper remedy for the Dodd-Frank Act’s for-cause removal provision is to sever the provision limiting the President’s authority to remove the CFPB Director, and does not seek a declaration that the entire agency or its operations is unconstitutional. The United States suggests, however, that it is appropriate for the Court to reach the constitutional issue. The earlier Department of Justice brief had suggested the Court may seek to avoid the constitutional issue by deciding the case on statutory grounds. Finally, the United States argues that the Court’s grant of rehearing en banc in Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), regarding the status of administrative law judges of the Securities and exchange Commission under the Appointments Clause of the Constitution should not affect the outcome of the PHH appeal.

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David Stein advises clients on credit reporting, financial privacy, financial technology, payments, retail financial services, and fair lending issues. He assists a broad range of financial services firms, consumer reporting agencies, financial technology companies, and their vendors with regulatory, compliance, supervision, enforcement, and…

David Stein advises clients on credit reporting, financial privacy, financial technology, payments, retail financial services, and fair lending issues. He assists a broad range of financial services firms, consumer reporting agencies, financial technology companies, and their vendors with regulatory, compliance, supervision, enforcement, and transactional matters.

Mr. Stein has significant experience advising clients on compliance with the FCRA, GLBA, ECOA, EFTA, E-Sign Act, TILA, TISA, FDCPA, Dodd-Frank Wall Street Reform and Consumer Protection Act, and FTC Act, as well as state financial privacy laws. Mr. Stein is a member of the firm’s fintech and artificial intelligence initiatives and works with clients on issues related to cutting edge technologies, such as blockchain, virtual currencies, big data and data analytics, artificial intelligence, online lending, and payments technology.

Mr. Stein previously served in senior regulatory, policy-making, and management positions at the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve Board (FRB). He played a significant role in developing regulations and policy on credit reporting, financial privacy, retail payments systems, consumer credit, fair lending, overdraft services, debit interchange, unfair or deceptive acts or practices, and mortgage origination and servicing. Mr. Stein draws upon his government experience in representing clients before the CFPB, the FRB, and other regulatory agencies and leverages his insights into the regulatory process to provide clients with practical, actionable advice.