Earlier this month, the DOJ filed an unopposed motion for leave to file an amicus brief which indicated that the Trump Administration might be switching sides in the legal battle, departing from the position that the DOJ took under President Obama. So it came as no surprise when the DOJ submitted its amicus brief in the PHH case last Friday and asked the DC Circuit to declare the CFPB’s leadership structure unconstitutional.
While PHH took an aggressive position against the CFPB, arguing that the only way to address the agency’s multiple unconstitutional features is to “strike down the CFPB in its entirety,” the Trump DOJ took a more moderate approach. The DOJ argued that the appropriate remedy for the constitutional violation is to “sever the provision limiting the President’s authority to remove the CFPB’s Director, not to declare the entire agency and its operations unconstitutional.” The DOJ essential asked the court en banc to reinstate the ruling from October, suggesting that “the panel correctly applied severability principles and therefore properly struck down only the for-cause removal restrictions.”
Under the CFPB’s current structure, the director serves a five-year term and can only be removed by the president for cause which requires “inefficiency, neglect of duty, or malfeasance in office.” If the DC Circuit agrees with the DOJ, the CFPB would remain intact but President Trump could replace Director Cordray at any time.