A closer look at DC Circuit’s CFPB Decision

Earlier this week, a three-judge panel held that the CFPB is unconstitutionally structured and that the agency violated due process principles when it retroactively applied its RESPA interpretations while pursuing an enforcement action against mortgage lender, PHH. The court vacated the Bureau’s ruling and remanded the case to the CFPB for reconsideration consistent with the DC Court’s opinion.

DC court finds CFPB structure unconstitutional

A three-judge panel on the DC Circuit Court of Appeals declared the CFPB structure unconstitutional. According to the panel, the Bureau violated the Constitution’s separation of powers doctrine because its sole director, Richard Cordray, is not sufficiently accountable to the president. In its decision, the court explained that CFPB’s single director leadership structure is unlike other independent agencies that are not accountable to the president because their leadership is checked by multiple commissioners or board members.

SBA comment letter asks CFPB to reconsider payday rules

SBA comment letterOn October 7, the Small Business Administration’s Office of Advocacy submitted its comment letter on the CFPB’s short-term, small-dollar loan proposal. A copy of the SBA comment letter is available here.

The Office of Advocacy (Advocacy) was established to act as a voice for small businesses in the rulemaking process. In its comment letter, the Advocacy noted that the Small Business Jobs Act of 2010 “requires agencies to give every appropriate consideration to comments provided by Advocacy.”

SBA roundtables scrutinize CFPB payday proposal

SBA roundtablesIn September, the Small Business Administration’s Office of Advocacy hosted a series of roundtable meetings on the CFPB’s proposed payday loan rule. The roundtables focused on the proposal’s potential economic impact on small entities and rural communities and the possible alternatives that might be available to achieve the regulatory objectives in a less costly manner. The CFPB’s proposed rule would require lenders to complete a “full-payment test” for covered loans. In general, the full-payment test requires that the lender determine that the consumer will be able to repay a loan without having to re-borrow in order to qualify.