By Lisa Lambert
WASHINGTON (Reuters) – The Trump administration took an unusual step on Friday in its efforts to discourage the US financial consumer watchdog created after the banking crisis, and the federal government’s executive branch told a court that one of your own agencies is violating the US Constitution.
The Justice Department filed a brief opposing the Consumer Financial Protection Bureau’s appeal of a decision that its sole director structure does not conform to the constitution.
The decision the bureau appealed also said that the president should have the power to fire the head of the agency at will. Under the Dodd-Frank Wall Street reform act of 2010 that the CFPB created to protect individuals from loan fraud, the president can only fire the agency director for one cause.
The CFPB director is currently Obama-appointed Richard Cordray, hailed by consumer advocates for cracking down on payday lenders, credit card companies, and debt collectors. Many Wall Street bankers and executives, along with Republican lawmakers, have said their authority to write and enforce regulations is too broad.
The agency can represent itself in court cases, except those before the Supreme Court, which puts President Donald Trump in an unusual situation: It cannot order the Justice Department to withdraw the appeal.
Instead, the Justice Department was only able to file one brief supporting CFPB’s opponent, the mortgage company PHH Corp.
“A one-way independent agency presents a greater risk than an independent multi-member commission of taking actions or adopting policies inconsistent with the president’s executive policy,” argued the Justice Department, saying that a commission should commit, while a single director should not answer to anyone.
The department also said that because CFPB directors have five-year terms, a president may not have the opportunity to appoint someone who agrees with him. Cordray’s term expires next year.
The department argued that the U.S. Court of Appeals for the District of Columbia Circuit should allow Trump to fire the director at will, upholding the original decision reached by a three-member panel of his justices in October.
No president of the United States has ever removed the director of an independent agency for just cause. Republican lawmakers say the Cordray story provides Trump with cause for firing, though some are seeking a legislative path to fire him.
The rare inter-agency legal fight was widely expected.
After Trump’s election victory, attorneys general in some states and Democrats in Congress requested permission to represent the CFPB on appeal, anticipating that Trump would attempt to undermine the agency.
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