CFPB Structure Ruled 'Constitutional' by US Appeals Court

The U.S. Court of Appeals for the Ninth Circuit has ruled that the CFPB's single-director structure is constitutional. CUNA and the state leagues have advocated that the Bureau's structure be reformed from a single director to a five-person, bipartisan commission.

Numerous lawsuits have been filed challenging the Bureau's leadership structure as a potential violation of the Constitution's separation of powers. The Ninth Circuit cited a decision last year from the U.S. Court of Appeals for the D.C. Circuit which upheld the Bureau's constitutionality in another case brought by PHH Corp.

Although PHH Corp. declined to appeal the D.C. Circuit's ruling, there continues to be other challenges: The Fifth Circuit Court of Appeals heard oral arguments last month for a challenge to the Bureau's constitutionality brought by defendants accused by the Bureau in 2016 of engaging in unfair payday lending conduct. In March, the CFPB defended its structure before the U.S. Court of Appeals for the Second Circuit, arguing that Supreme Court precedent reinforces its constitutionality, and also that its structure "does not impede the president's ability to perform his constitutional duties."

However, earlier this year, the Supreme Court declined to hear a lawsuit challenging the Bureau's structure.

In July 2018, the Fifth Circuit determined that the Federal Housing Finance Agency's (FHFA) single director structure is unconstitutional.