The House Financial Services Committee has scheduled a
hearing on March 21 titled "The Bureau of Consumer Financial Protection's (CFPB's)
Unconstitutional Design." The hearing comes on the heels of a decision by
the Department of Justice to not defend the Bureau in a landmark case brought
to PHH challenging the constitutionality of CFPB's structure.
Committee's majority memorandum states, "This hearing will examine
whether the structure of the Bureau of Consumer Financial Protection ("Bureau")
violates the Constitution as well as structural changes to the Bureau to
resolve any constitutional infirmities. As established by the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Pub. L. No. 111-203) ("Dodd-Frank"),
the Bureau is headed by a single Director who serves a term of five years and
is removable by the President "for inefficiency, neglect of duty, or
malfeasance in office." Under Dodd Frank, the Director sets the Bureau's
budget; the Bureau is funded outside of the congressional appropriations
process through transfers from the Federal Reserve System's operating expenses,
subject to a statutory cap.
to appear as witnesses are The
Honorable Theodore Olson, Partner, Gibson, Dunn & Crutcher LLP who is the lead
counsel for PHH in its suit, Professor Saikrishna Prakash, James Monroe
Distinguished Professor, University of Virginia School of Law; Adam White,
Research Fellow, Hoover Institution; and Brianne Gorod, Chief Counsel,
Constitutional Accountability Center.
Alan S. Kaplinsky, an attorney with Ballard & Spahr, a firm that closely
monitors CFPB activity, writes in the firms blog that tomorrow's hearing will
undoubtedly cover the same constitutional issues that will be argued before the
Circuit Court for the District of Colombia in May in PHH Corporation v CFPB.
Committee Chairman Jeb Hensarling (R-TX) in a press release, applauded the
Justice Department's decision to support PHH in its suit, saying in part, "Republicans
have said for years that the Bureau is unconstitutionally structured. Its
lack of accountability and the unparalleled authority placed in the hands of
the Bureau's unaccountable sole director make the CFPB arguably the most
powerful and least accountable bureaucracy in American history."