Housing Policy: An Unconstitutional Structure Part II

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Industry Reactions to the PHH v. CFPB Decision

On October 11, a panel of judges on the U.S. Court of Appeals for the District of Columbia ruled that the single-director structure of the Consumer Financial Protection Bureau (CFPB or the bureau) was unconstitutional. The ruling does not replace the director with a board or group of commissioners; instead, it gives the president the power to dismiss the director “at will.” For a full recap of the PHH v. CFPB case, the D.C. Appeals Court ruling and implications for the industry, please see the companion blog piece on this subject: An Unconstitutional Structure: What You Need to Know About the PHH v. CFPB Decision.

Below are reactions to the court decision from a variety of trade associations and industry watchdogs.

American Bankers Association “We’ve long believed that a five-member, bipartisan commission, as originally proposed, would strike a reasonable balance between independence and accountability,” said ABA President and CEO Rob Nichols. “A commission would broaden the perspective on any rulemaking and promote fair enforcement activity at the bureau, and it would provide necessary and appropriate checks and balances in the exercise of the CFPB’s authority.”

Americans for Financial Reform “Americans for Financial Reform is disappointed by the D.C. Circuit’s decision today… Compromising the CFPB’s independence would be a huge gift to Wall Street greed and a loss for consumers. We are hopeful that this erroneous decision will be overturned,” said Lisa Donner, executive director of Americans for Financial Reform.

Center for Responsible Lending “Today’s ruling is disappointing, but not surprising. Conservative members of Congress have consistently tried to weaken the CFPB’s authority for meritless and political reasons. Today, these two judges have made common cause with that effort… Any efforts to change the CFPB’s structure would reduce its effectiveness and harm hardworking people across the country,” said Mike Calhoun, president of the Center for Responsible Lending (CRL).

Consumer Bankers Association “We agree with the D.C. Circuit Court of Appeals when it said in the decision ‘the deliberative process and multiple viewpoints in a multi-member independent agency can help ensure that an agency does not wrongly bring an enforcement action or adopt rules that unduly infringe individual liberty.’ For this reason, we still assert a five-person, bipartisan board would preserve the bureau as a strong, stable and effective regulator that would give the banking system certainty and consistency, regardless of a President Trump or Clinton,” said president and CEO Richard Hunt.

Consumer Reports “We are disappointed with the ruling, but we are glad that the decision left the CFPB’s house intact,” emailed Laura MacCleery, vice president of policy and mobilization for Consumer Reports. “The recent scandal with Wells Fargo shows that a watchdog for the integrity of economic products is needed today and every day. We hope that future administrations value the independence of the agency and act to preserve its strength, powers and abilities as Congress intended.”

Credit Union National Association “I applaud the ruling from the U.S. Court of Appeals for D.C. Circuit regarding the PHH case against the Consumer Financial Protection Bureau in that it will establish a meaningful check and balance and bring needed accountability to the director’s role,” CUNA President and CEO Jim Nussle said. “This ruling confirms CUNA’s concern that the structure of the CFPB is flawed and that an unchecked, independent director who answers to no one can’t lead to good public policy. CUNA continues to support a five-person commission for the CFPB instead of its current structure.”

Mortgage Bankers Association Mortgage Bankers Association President and CEO David Stevens, CMB, said the court issues an “extremely thoughtful” opinion. “It addresses all of the key issues raised by the PHH case, including the proper interpretation of the Real Estate Settlement Procedures Act, the need for due process including reasonable statutes of limitations and the very constitutionality of the CFPB itself,” Stevens said. “We recognize that the CFPB does important work to protect consumers and that this case is far from settled and expect the government to continue to litigate it.”

National Association of Federal Credit Unions “NAFCU urges an immediate moratorium at the CFPB on any rulemaking not already implemented. The bureau should also consider ceasing and desisting all rulemakings until the legality is resolved,” said NAFCU President and CEO Dan Berger. NAFCU was the only financial services trade association to oppose subjecting credit unions to CFPB authority under Dodd-Frank. The association also supports pending legislation that would move the bureau from a single director to a five-person commission.

National Association of Mortgage Brokers “NAMB applauds the decision made by the U.S. Court of Appeals today regarding PHH,” said Fred Kreger, CMC, NAMB president. “This process shows that the U.S. Constitution’s process of checks and balances within the legal system is alive and well. Now that the constitutionality of the CFPB issue has been settled by the courts, the job of clarifying regulations and helping consumers get into a home can move forward.”

National Association of Realtors “Today’s decision offers much-needed clarity on the legality of marketing service agreements, and makes clear that MSAs are compliant with RESPA provided that payment for goods and services actually furnished or performed are made at fair market,” said NAR President Tom Salomone. “We’re hopeful this will address any uncertainty moving forward and offer a clear road ahead for any of our members who have entered into MSAs with settlement service providers.”

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