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Don’t Worry, the CFPB is Not Unconstitutional

October 13, 2016 | Adam S. Minsky, Esq. Articles Current Events

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The Consumer Financial Protection Bureau (“CFPB”) is a relatively new federal agency tasked with overseeing financial markets and regulating their impacts on everyday consumers. The CFPB “protects consumers from unfair, deceptive, or abusive practices” and it “takes action against companies that break the law.”

The CFPB made the news recently for hitting Wells Fargo with a massive financial penalty; Wells Fargo defrauded its customers by setting up thousands of bogus bank accounts and lines of credit. The CFPB has also come down hard on student loan servicers and debt collectors, most recently slamming the federal student loan income-driven repayment system in a comprehensive report just a few months ago.

This week, however, the media has been reporting on a federal appeals court case involving the CFPB. Some media outlets erroneously declared that the court found that the CFPB was “unconstitutional.” Hysteria quickly followed. Does this mean the CFPB has been gutted? Will consumers and student loan borrowers no longer be protected? Is this a big win for big business over the little guy?

The short answer is no. The U.S. Court of Appeals for the District of Columbia simply ruled that one component of the CFPB’s structure is unconstitutional. Specifically, the Court struck down a rule that permitted the removal of the CFPB’s Director only if there was good cause. The Court found that this conferred too much power on the agency. Instead, the Director should be removed at the will of the President (who is the appointing authority). The Court has left intact all other elements of the CFPB’s structure and regulatory authority. Bottom line is that the CFPB remains unchanged, except that now the President can remove its Director more easily.

While the opponents of the CFPB are claiming victory, the reality is that this will not do much to curtail the CFPB’s powers. I do have some concerns that this ruling may politicize the CFPB a bit more than it otherwise would have been, since now a President can change the CFPB’s Director at will. But this isn’t much different from routine presidential appointing authority for many other federal agencies. And it does not impact the CFPB’s mission to protect consumers.

So ultimately, nothing to see here, folks. Carry on.

Have you had a student loan servicing problem? File a complaint with the CFPB.

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About Adam S. Minsky, Esq.

Adam S. Minsky founded the first law office in Massachusetts devoted entirely to assisting student loan borrowers, and he is one of the only attorneys in the country practicing in this area of law. He provides counsel, legal assistance, and direct advocacy for borrowers on a variety of student loan-related matters. He regularly speaks to students, graduates, and advocates about the latest developments in higher education financing.

Books by Adam S. Minsky

The Student Loan Handbook for Law Students and Attorneys

The Student Loan Handbook for Law Students and Attorneys

Student Loan Debt 101

Student Loan Debt 101: The Definitive Guide to Understanding and Managing Your Student Loans

Student Loans for Parents and Cosigners

The Student Loan Guide for Parents and Cosigners

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asminsky@minsky-law.com
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Boston, MA 02110

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