The Consumer Financial Protection Bureau is under fire, and Barney Frank is standing up to defend it.
The former Democratic member of the House is a co-author of the landmark legislation that helped create the agency. Frank spoke out on Tuesday against a “conservative assault” on the independent agency, which was created in 2011 as part of Congress’ sweeping reform of the financial system under Dodd-Frank.
Today the CFPB, which is in charge of protecting consumers from unfair, deceptive or abusive practices, faces a major challenge in court.
It started with a suit by PHH Corp., which the CFPB hit with a $ 109 million fine. Afederal appeals court ruled in October that the way the CFPB is structured is unconstitutional.
The CFPB is led by a single director, Richard Cordray. He can’t be fired by the president without cause. The court said the president should have the power to fire the head of the CFPB at will.
The Justice Department has stepped in to back that decision.
“The director can be removed for negligence, for not performing his or her duty. But that’s not what this is about,” Frank said on a call with reporters organized by the Constitutional Accountability Center, a progressive group. “This is an objection to diligence.”
The bureau has since been granted a rehearing, which will take place in May.
In the meantime, both sides are turning up the heat.
“The Justice Department is now suing a federal agency created by Congress,” Frank said. Representatives from the Constitutional Accountability Center also called the DOJ’s actions “very unusual.”
The DOJ filed a legal brief in March arguing that the Constitution guarantees the president “the authority to remove executive branch agency heads at will,” unless the agency is headed by a commission.
“There is a greater risk that an ‘independent’ agency headed by a single person will engage in extreme departures from the President’s executive policy,” the DOJ wrote.
The White House has been public about its disdain for Dodd-Frank — though it’s steered clear of calling for the outright elimination of the CFPB.
In February, President Donald Trump signed an executive order mandating that the heads of regulatory agencies send him suggestions about how to change existing financial regulation within 120 days.
And on Tuesday, President Donald Trump promised to “do a very major haircut on Dodd Frank.”