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The Future of the Consumer Financial Protection Bureau, Or: Could We Come up with a Worse Initialism than CFPB?

By Tommy La Voy*

In the beginning, there was laissez-faire. But after the Great Depression, cooler heads prevailed, and a network of financial regulations were created. Years passed; the history of the Depression became legend, and legend became myth. Financial deregulation and regulatory capture defanged the cops on the Wall Street beat. Bush was president, Blackberry was king, and a financial crisis caused the Great Recession.

Financial crises, at least those of the magnitude that caused this past recession, do not have to be inevitable.[1] They are the creation of a system that allows, and even encourages the type of behavior that can lead to massive recessions. The 111th Congress, cementing its place in the annals of active legislatures, passed the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010 as a reaction to the crisis.[2] It was intended to modify financial regulations to reduce the chance of a repeat performance of the recession in the future.[3] A significant part of Dodd–Frank was the creation of the Consumer Financial Protection Bureau (CFPB).[4]

The CFPB was first envisioned by then-Harvard Law professor Elizabeth Warren, who took the role of Assistant to the President in shepherding along its creation.[5] It was designed to regulate consumer finance, enforce those regulations, and empower those consumers.[6] Educating consumers to avoid their unknowing reliance on risky financial instruments like subprime loans, and regulating those financial services to reduce their abuse should combine to lower systemic risk across the economy.

It is now more than five years later. The CFPB’s actions have led to $11.7 billion being ordered as relief for twenty-seven million consumers.[7] They have handled nearly a million consumer complaints, leading to hundreds of thousands of company responses.[8] Tens of millions of consumers have benefited from the CFPB’s improvements to how people understand financing college, buying cars, and buying homes.[9] More than sixty million mortgages have been made safer through their servicing protections.[10] And tens of millions of consumers are being helped by the CFPB’s rules against predatory behavior in payday lending, arbitration, and debt collection.[11]

In its role as a consumer watchdog, the CFPB fined mortgage provider PHH Corporation $109 million for taking kickbacks from the insurance companies to which PHH referred its own customers.[12] The resulting case, PHH Corp. v. Consumer Fin. Prot. Bureau, No. 15-1177, 2016 U.S. App. LEXIS 18332 (D.C. Cir. Oct. 11, 2016), found its way to the U.S. Court of Appeals for the D.C. Circuit. The decision handed down this past October ruled the CFPB’s leadership structure unconstitutional.[13] Unlike other independent agencies, the CFPB has a single director, appointed to a five-year term and unable to be removed by the president without cause.[14] The court’s holding struck down the clause in question, making the CFPB director removable at will by the president.[15]

Rather than simply solving the statutory issue raised, and so giving petitioner full relief (as argued for by Judge Karen Henderson in a partial dissent), Judge Brett Kavanaugh wrote a majority opinion that tackled the constitutionality issue head-on, an argument that was only raised in the alternative by PHH Corporation.[16] This makes sense, though, as Judge Kavanaugh has previously written: “constitutional avoidance can sometimes look more like judicial abdication . . . than judicial restraint.”[17] It seems that straying from resolving the case at bar by interpreting statutes, and instead making unnecessary constitutional determinations is a manifestation of judicial restraint.

In Judge Kavanaugh’s view, the court was exercising judicial restraint in its constitutionality holding.[18] They could have gone further by insisting that the CFPB shut down while being converted into a multi-member commission.[19] This seems to indicate that a court’s judicial activism is justifiable by that court not having taken a more extreme action.

Seeing him tilt at such constitutional concerns gives one reason to believe that Judge Kavanaugh has imagined himself on the plains of La Mancha. In 2008, he wrote a dissenting opinion in Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 383 U.S. App. D.C. 119, 537 F.3d 667 (2008), in which he attacked the constitutionality of another leadership structure, this time the Public Company Accounting Oversight Board. Fellow Bush-appointee to the D.C. Circuit, Judge Janice Brown, characterized Kavanaugh’s dissenting opinion in that case “as an effort to ‘create constitutional problems where there are none.’”[20]

Ironically, in the past Judge Kavanaugh has seemed willing to abdicate the responsibility of constitutional interpretation when politically useful. When a majority on the D.C. Circuit upheld the Affordable Care Act’s constitutionality in 2011, Kavanaugh, likely with an eye to the upcoming 2012 presidential election, wrote: “the President may decline to enforce a statute that regulates private individuals when the President deems the statute unconstitutional, even if a court has held or would hold the statute constitutional.”[21] Kavanaugh’s decision to go against the bedrock of Chief Justice John Marshall’s opinion in Marbury v. Madison (“It is emphatically the province and duty of the judicial department to say what the law is”) earned this comment from Jeffrey Toobin: “Kavanaugh, in his decision, wasn’t interpreting the Constitution; he was pandering to the base.”[22] When Kavanaugh, sitting on his perch in the judicial branch, cannot nullify something he disfavors, that power becomes available to the president.

Coming back to the topic of this post, though, the D.C. Circuit’s decision holds, the CFPB is now an agency of the executive branch, and its director is removable at will by the president. Come the afternoon of January 20th, all bets on the future of the CFPB are off.

The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

*Thomas La Voy is a Junior Editor on MJEAL. He can be reached at

[1] Press Ass’n, Mervyn King: New Financial Crisis Is ‘Certain’ without Reform of Banks, THE GUARDIAN (Feb. 28, 2016),

[2] Brady Dennis, Congress Passes Financial Reform Bill, Wash. Post (July 16, 2010),

[3] Id.

[4] Megan Slack, Consumer Financial Protection Bureau 101: Why We Need a Consumer Watchdog, The White House Blog (Jan. 4, 2012),

[5] Eric J. Mogilnicki & Melissa S. Malpass, The First Year of the Consumer Financial Protection Bureau: An Overview, 68 The Bus. Law. 558 (2013).

[6]  Id.  at 559.

[7] Zixta Q. Martinez, Consumers Count: Five Years Standing up for You, Consumer Financial Protection Bureau Blog (July 14 2016),

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Andrew Rudalevige, Is the Consumer Financial Protection Bureau Constitutional? The D.C. Circuit Says No. Here’s Why., Wash. Post (Oct 19, 2016),

[13] Id.

[14] Id.

[15] Id.

[16] PHH Corp. v. Consumer Fin. Prot. Bureau, No. 15-1177, 2016 U.S. App. LEXIS 18332, at *143 (D.C. Cir. Oct. 11, 2016).

[17] Brett Kavanaugh, Fixing Statutory Interpretation, 129 Harv. L. Rev. 2118, 2146, (2016).

[18] Alison Frankel, The D.C. Circuit’s Gratuitous Ruling on CFPB Constitutionality, Reuters Blog (Oct. 11, 2016),

[19] PHH Corp., No. 15-1177, 2016 U.S. App. LEXIS 18332, at *94.

[20] Charlie Savage, Appeals Courts Pushed to Right by Bush Choices, N.Y. Times (Oct. 28, 2008),

[21] Jeffrey Toobin, Holding Court, The New Yorker (Mar. 26, 2016),

[22] Id.

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