Corporations, Securities & Antitrust

CFPB Ruled Structurally Unconstitutional: PHH v. CFPB

Financial Services & E-Commerce Practice Group Teleforum Monday, October 24, 02:00 PMFederalist Society Teleforum Conference Call

The creation of the Consumer Financial Protection Bureau was one of the crown jewels in the Dodd-Frank Financial Reform legislation. The CFPB is unique in American constitutional history in that it deliberately combines a huge degree of regulatory power with minimal accountability to the democratic branches of government. Under Dodd-Frank, the CFPB is headed by a single director appointed for a five-year term and removable by the Presidentonly for cause. In addition, the CFPB draws its budget from outside the Congressional appropriations process, being directly funded by the Federal Reserve.

On October 11 the DC Circuit ruled in the case of PHH Mortgage v. Consumer Financial Protection Bureau. The ruling for the Court concluded that it was unconstitutional to create an independent agency headed by a single director removable only for cause. As a remedy, the court ordered the severance of the for cause removal provision, thereby rendering the head of the CFPB removable at-will by the President and converting the agency from an independent agency to an executive agency. In addition, the Court reversed the ruling of the CFPB's Director Richard Cordray on the facts of the immediate case, in which Director Cordray had increased the fine from $6 million (the amount imposed by an administrative judge) to $109 million. This teleforum will explore the reasoning of the PHH case and the implications for the CFPB and for the future of the administrative state.


  • Prof. Todd J. Zywicki, Foundation Professor of Law and Executive Director of the Law & Economics Center, Antonin Scalia School of Law, George Mason University

  • Thomas M. Hefferon, Partner, Goodwin Procter LLP