July 18, 2018

Appeals court: FHFA's single-director structure 'unconstitutional'

gavelThe Fifth Circuit Court of Appeals ruled earlier this week that the Federal Housing Finance Agency (FHFA) "is unconstitutionally structured and violates the separation of powers." Noted throughout the court's decision were arguments used in PHH Corp.'s lawsuit against the Bureau of Consumer Financial Protection (bureau).

Specifically, the Fifth Circuit cited D.C. Circuit Court of Appeals Judge – and now Supreme Court justice nominee – Brett Kavanaugh's dissent in the en banc decision that upheld the bureau's single-director structure.

In addition to the FHFA structure challenge, the Fifth Circuit has agreed to hear a challenge to the bureau's constitutionality brought by defendants accused by the bureau in 2016 of engaging in unfair payday lending conduct; a federal judge in New York also recently ruled the bureau's structure unconstitutional. The Supreme Court could eventually take up the single-director constitutionality issue to settle lower court differences.

NAFCU has long advocated for a commission structure at the bureau to ensure long term continuity and stability in its policymaking.