The Consumer Financial Protection Bureau won a significant legal victory Thursday when an appeals court agreed to re-hear the case that threatened to fundamentally change the agency’s structure and imperiled its leader, Richard Cordray.
A Washington D.C. circuit court of appeals ruled last fall that the bureau’s structure was unconstitutional. It found that too much “unilateral power” was granted to its director — in part because the law that created the bureau made it hard for a president to remove the bureau’s leader, who serves a five-year term that’s intentionally out of sync with political elections. The financial reform bill which created the CFPB included provisions that its director could only be removed “for cause,” defined in the legislation as due to ”negligence, inefficiency (or) malfeasance,” in an attempt to insulate the agency from politics. The court’s ruling meant the president could remove the director for any reason.