On Wednesday, American Banker published an article taking a closer look at the recent rise in litigation at the CFPB. With the uncertain political climate and legal challenges that threaten to overhaul the Bureau’s structure, funding, and day-to-day operations, more and more financial companies opted to push back against CFPB enforcement actions.
According to the report, the Bureau is currently facing at least a dozen cases attacking the agency’s constitutionality and one-third of the 21 enforcement actions the CFPB has filed this year are being challenged in federal court.
Here are some of the highlights from the article:
The CFPB does not provide a breakdown of how it spends the $565 million it requested in funds for fiscal year 2016, but the agency maintains it has enough resources to tackle the roughly three dozen significant cases it has in the works. But outsiders and former agency employees argue that the agency is being taxed.
Ironically, part of its predicament now may be a result of its early successes when it was first created and big banks quickly agreed to million-dollar settlements. Those wins fostered a culture that encouraged big settlements and a refusal to negotiate that now is backfiring in this changed political climate, according to observers.
“As a new agency, the CFPB may not have figured out how to change their approach and settle more cases,” Morris said. “The more strict their position, the less likely [they are] to settle, and the more cases they have to litigate.”
Its biggest case so far, PHH Corp. v. CFPB, also paved the way for other companies to challenge the agency’s single-director structure as unconstitutional.