Reuters - US Market News

Creators of U.S. consumer agency rise to defend it in court

Nov 29 The U.S. lawmakers who helped bring the Consumer Financial Protection Bureau into being rose to defend it on Tuesday, urging the full U.S. Court of Appeals for the District of Columbia to review a ruling that poses an existential threat to the agency.

In an amicus brief, 21 current and former members of Congress said the whole court should review a decision reached by three of its judges in October that the CFPB’s sole director has too much power and that the President should have power to fire the director.

Earlier this month the CFPB asked the full court to review the decision, in a lawsuit involving PHH Corp. The decision was stayed pending appeal.

In their brief the lawmakers said the decision will hamper the agency’s ability to function as Congress intended, create constitutional confusion for other agencies with single directors, and go against legal precedent.

An agency to protect consumers from bad loans and financial products was the brainchild of Elizabeth Warren, now a Massachusetts Senator. It was created through the 2010 Dodd-Frank Wall Street reform law passed in the wake of the massive financial crisis that was fueled by defaulting mortgages.

Warren signed the brief alongside one of the law’s chief authors, former Representative Barney Frank. Both figures are Democrats and the other signatories also belong to the party, including California Representative Nancy Pelosi, who leads the House Democrats.

Ten consumer protection and civil rights non-profit organizations, including Americans for Financial Reform and the National Consumer Law Center, also filed a brief supporting the CFPB’s petition.

It is rare for lawmakers to enter a legal fray, although Frank signed a similar brief in a court challenge to the Financial Stability Oversight Council, which was also created in the Dodd-Frank law.

“Congress carefully designed the CFPB to elevate the interests of consumers above those of a well-heeled industry and provided for a single director removable for cause to ensure accountability and effectiveness,” Pelosi said in a statement after the brief was filed. “Under the Constitution, Congress has considerable latitude to shape the structure of independent agencies.”

Republicans say that the agency should be governed by a bipartisan commission. (Reporting by Lisa Lambert; Editing by Chris Reese)

Reuters: Market News

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