A federal appeals court ruled on Tuesday that the structure of the U.S. agency charged with guarding consumers' finances is unconstitutional, fueling an election-year political fight over one of the signature government responses to the 2007-09 financial crisis.This is a seriously f%$#ed up ruling that is akin to the courts rulings in the early 20th century striking down wage, hour, and safety legislation on the basis of a imaginary "Right of Free Contract"*.
The U.S. Court of Appeals for the District of Columbia Circuit threw out a $109 million penalty against PHH Corp in 2014, saying the structure of the Consumer Financial Protection Bureau gives its sole director too much power.
The three-judge panel, though, also sought to remedy the problem by giving the president the power to fire the director, which it said made the position similar to the Attorney General and other constitutionally sanctioned agency heads who answer to the White House.
"The CFPB has dodged the biggest bullet, which is to be declared unconstitutional and have all its prior rules and regulations voided," said Andrew Sandler, chairman of BuckleySandler law firm.
But he added "lawyers will be looking hard," at past agency decisions.
The CFPB is expected to request the entire appeals court conduct an "en banc" review of the case. The losing side will likely appeal to the Supreme Court.
As near as I can figure out, this ruling might technically provide a precedent for restructuring the Federal Reserve, but that's the glass half full view.
Here's hoping that the court hears an en banc appeal, and overturns this truly incoherent ruling.
*Lochner v. New York, which affirmed the right of an employer to work his employee to death.