The Consumer Financial Protection Bureau (CFPB) was created in 2010 by the Dodd-Frank financial reform law, the CFPB is a regulation agency, their job is to oversee any financial product or service that is offered to consumers. A federal appeals court has recently ruled that the structure of the CFPB is unconstitutional.
The Consumer Financial Protection Bureau is thought to be unconstitutional, but a federal appeals court ruled that the Bureau can still operate under the president’s supervision. If the court had ruled the Consumer Financial Protection Bureau as unconstitutional, it would have had to revoke any and all decisions that were made by the Bureau.
The current situation has the potential to cause future problems for the CFPB because now more lenders will be looking into any and all past and future decisions made by the Consumer Financial Protection Bureau. This ruling can cause more lenders to start challenging CFPBs actions.
People believe that the CFPB has too much power. For example, the head of the Consumer Financial Protection Bureau can only be fired “for cause,” this is a reason for concern because it means that the CFPB is giving too much power to the sole director of the agency. The reason that the Consumer Financial Protection Bureau was allowed to continue operations was that the court had ruled that they would permit the agency to run if they allowed the president to remove the director at his will. This regulatory action will keep the agency under checks and balances, but it may also permit problems with future CFPB made regulations. This court ruling has the potential to leave a serious impact on the Consumer Financial Bureau, especially with the upcoming presidential election, because our next president will be the deciding factor in the CFPBs future actions and regulations.
Judge Kavanaugh said that the structure of the CFPB “poses a far greater risk of arbitrary decision-making and abuse of power and a far greater threat to individual liberty than does a multi-member independent agency.” The reason that the Consumer Financial Protection Bureau poses this risk is that there are far more regulations for an independent agency such as having internal checks and balances through having a multi-member commission, whereas the CFPB is controlled by one sole director who does not need to go through any of these rules and regulations.
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