Banking and Finance Law Daily PHH Corp. argues against challenges to its CFPB organization win
Monday, January 30, 2017

PHH Corp. argues against challenges to its CFPB organization win

By Richard A. Roth, J.D.

PHH Corporation has told the U.S. Court of Appeals for the District of Columbia Circuit that the entire court should not rehear a panel’s two-to-one decision that the Consumer Financial Protection Bureau cannot exist as an independent agency with a single director. PHH also wants the court to reject an "egregiously untimely" request by attorneys general of 16 states and the District of Columbia to intervene in the suit.

The majority of the three-judge panel decided that establishing the CFPB as an independent agency whose single director could be removed by the president only for cause violated the separation of powers requirement of the U.S. Constitution (see PHH Corp. v. CFPB, Oct. 11, 2016). However, rather than invalidating all of the Consumer Financial Protection Act provisions creating the CFPB, the court ordered that the bureau should be considered to be an executive agency whose director could be removed at the president’s discretion.

The CFPB has asked the D.C. Circuit to rehear the case en banc. The panel decision will be ineffective at least until the court decides whether to grant the bureau’s request.

Request to intervene. The state AGs assert in their motion for permission to intervene that their participation is needed because the Trump administration has indicated it might not defend the CFPA provisions. This could affect the interest of their offices and the citizens of the states they represent.

PHH, however, notes in its response that a petition to intervene in an appellate court is supposed to be brought within 30 days after a petition for review is filed. However, the AGs did not file their request for more than 19 months. There is no good reason to excuse the delay, the company says, because the possibility of an adverse ruling was known from the beginning of the appeal.

In any case, the states have no legally protected interest at stake in the suit, the company says. The proceeding in which the case arose—a CFPB enforcement action under the Real Estate Settlement Procedures Act—was not open to the participation of agencies other than the CFPB. The AGs’ real goal, according to PHH, is to be able to file a petition for U.S. Supreme Court review of an adverse decision should the federal government not do so.

Reply to solicitor general. PHH also has filed a response to the amicus curiae brief filed by the federal government. As characterized by PHH, the Solicitor General’s brief is "nothing more than an academic debate with Montesquieu and Madison as to why the constitution mandates the separation of powers" that says nothing about how the doctrine should be applied to the CFPB’s structure. The Solicitor General supports a request for a rehearing en banc but does not support any of the bureau’s reasons, the company claims. That being the case, the brief lends no support to the bureau’s motion for a rehearing.

Companies: PHH Corporation

MainStory: TopStory CFPB DistrictofColumbiaNews DoddFrankAct Mortgages RESPA

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