Alternative Facts & History, and Alarming Implications, in DOJ's CFPB Brief.

[mahatmakanejeeves]

Alternative Facts & History, and Alarming Implications, in DOJ's CFPB Brief.

Neil J. Kinkopf // 4/17/17 // In-Depth Analysis

The Department of Justice recently submitted a brief in PHH v. Consumer Financial Protection Bureau, which raises questions about the constitutionality of how the CFPB is structured. (Deepak Gupta and Jon Taylor have analyzed that brief on Take Care, here and here.) The Department's Brief is alarming.

Quick Background

The CFPB had issued a penalty of $109 million against PHH for using a captive mortgage reinsurer. PHH, in turn, challenged the constitutionality of the CPFB’s structure. The CFPB is an independent regulatory agency created by the Dodd-Frank Act. Unlike most independent regulatory agencies, it is headed by a single Director, Richard Cordray, rather than by a multi-member commission or board. A panel of the D.C. Circuit bought PHH’s novel argument and the CFPB appealed to the D.C. Circuit en banc, which has accepted the appeal.

Throughout the litigation, the Department of Justice has performed its usual function of advocating the validity of the law establishing the CFPB. There is, however, a new Administration, and the Trump Department of Justice has changed its position in the case, filing an amicus brief in support of PHH’s challenge. Being an independent agency, the CFPB represents itself in litigation. It is, nonetheless, a highly unusual step for the Department of Justice to oppose the constitutionality of a duly enacted law. The Brief that the Department filed in this case is alarming on several grounds.

Alternative Facts

The Brief makes the claim, at page 3, that "limitations on the President's authority to remove a single agency head are a recent development to which the Executive Branch has consistently objected." This is patently wrong. Most obviously, when the CFPB itself was enacted, the President did not merely refrain from objecting, President Obama actively supported its establishment as an independent agency. Under the Obama Administration, the Justice Department has defended the constitutionality of the CFPB Director's independence in at least two lawsuits. In addition, no President has objected to the limit on removal authority with respect to the Director of the Federal Housing Finance Agency. It is especially telling that the provision did not elicit a signing statement when it was signed into law by President George W. Bush, "the Mahatma Gandhi of" signing statement issuers. Cf. Clinton v. New York, 524 U.S. 714 (1998) (Scalia, J., dissenting). ... I should point out that I have done no independent research on this point. These examples of unobjected-to removal restrictions appear in the Brief itself!

[YOHABLO]

1. PHH? somebody please.

[Marcuse]

2. PHH is one of the largest mortgage providers in the US.

A CFPB investigation showed that when PHH originated mortgages, it referred consumers to mortgage insurers with which it partnered. In exchange for this referral, these insurers purchased “reinsurance” from PHH’s subsidiaries. Reinsurance is supposed to transfer risk to help mortgage insurers cover their own risk of unexpectedly high losses. According to today’s Notice of Charges, PHH took the reinsurance fees as kickbacks, in violation of RESPA. The CFPB alleges that because of PHH’s scheme, consumers ended up paying more in mortgage insurance premiums.

https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-phh-corporation-for-mortgage-insurance-kickbacks/

http://corporate.phh.com/phoenix.zhtml?c=187859&p=irol-homeprofile

[Hortensis]

3. "GOP doesn't know how to rein in Warren's pet agency, the CFPB"

But of course any campaign to destroy must include their best tactic: Flooding the discussion with lies.

This seems to be a pretty good article about where politically opponents of the CFPB are currently.

The industry is chafing under the bureau's new rules, and conservatives object to the agency's design. It is not funded by Congress, but instead automatically by the Federal Reserve. And it is run by a single director, not a bipartisan commission. As a result, it has unusual ability to set rules as it sees fit, a power conservatives have decried as unconstitutional.

But, even with a unified GOP government, there is not a clear strategy about how to overcome Senate Democratic opposition to reform the bureau. "One complication is that the procedure that would allow Republicans to pass reform legislation with only 51 votes in the Senate, known as budget reconciliation, might not be suitable for legislation affecting the bureau.

Another is that some Republicans have reversed course now that a Republican is in the White House and no longer want to replace the bureau's single director with a bipartisan commission, but rather with a sympathetic deregulator who can harness the agency's power to pursue conservative goals. This year's version of sweeping House Republican legislation to replace the Dodd-Frank financial reform law will keep the single director, according to notes circulated among Republicans this week. Last year's version had imposed a five-member commission.

That is not what the industry wants. On Thursday night, the Consumer Bankers Association told the Senate Banking Committee that they recommend instituting a bipartisan commission to promote balanced and deliberative regulation. Keeping a single director, the group warned, would make the agency "susceptible to changing political viewpoints, jeopardizes industry certainty and makes it difficult for banks and credit unions to develop long-term plans to serve consumers and small business."

http://www.washingtonexaminer.com/gop-doesnt-know-how-to-rein-in-elizabeth-warrens-pet-agency-the-cfpb/article/2620353