To do its job protecting consumers, CFPB must be independent and free from political influence

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WASHINGTON – Consumer and civil rights groups released the following statements today following oral arguments in the U.S. Court of Appeals for the D.C. Circuit in PHH Corporation vs. CFPB. The hearing is a result of the Court’s decision to grant the Consumer Financial Protection Bureau’s (CFPB) petition for the full court to hear the case following a panel’s erroneous 2-1 ruling that the President may remove the CFPB Director without cause. The panel’s decision last year undermines the agency’s independence to regulate the financial services industry and protect consumers from bad practices of Wall Street banks and predatory lenders.
In November, consumer and civil rights organizations filed an amicus brief in support of the CFPB’s petition to rehear the case before the full court, and earlier this year, organizations and scholars filed briefs supporting the CFPB at the merits stage. In the filings, the advocates pressed their concerns that the consumer protection agency’s independence is critical to its successes that have led to the recovery of billions of consumer dollars.
Leading consumer advocates and civil rights groups are remaining hopeful that the full court will uphold the CFPB’s independence and rule in favor of American consumers. Over the last five years, the CFPB has used its independent authority to provide nearly $12 billion in relief to 29 million consumers who were victims of predatory lending practices.
The groups issued the following statements after today’s oral argument:

“Consumers rely on a CFPB run by a strong, independent and accountable director, like Richard Cordray,” said Linda Sherry, Consumer Action’s Director of National Priorities. “As the only federal financial regulator with sole responsibility for consumer protection, consumers cannot afford to lose it to a watered-down, weak regulator overly influenced by industry-controlled advisers. Consumer Action supports a firm and fair CFPB as it is currently structured.”
"Today’s hearing reaffirmed the need to keep the CFPB leadership structure intact. Since its establishment, the CFPB has proven to be highly effective in responding to unlawful, abusive practices within the financial services industry. Its ability to make consumer protection a top priority is due to its leadership structure by a single director who is insulated from undue special interests. If the 2008 financial crisis showed us anything, it's that people need an independent regulator to look after consumers and keep industry accountable. CFPB Director Richard Cordray has led the Bureau with a steady hand and worked tirelessly with his staff to return billions of dollars back to hardworking people across the country harmed by abusive financial practices. The Center for Responsible Lending will continue to support the CFPB as the agency fights to maintain its independent structure so it can carry out its mission,” said Mike Calhoun, president of the Center for Responsible Lending.
"The CFPB is an effective, accountable agency that has already secured nearly $12 billion in relief for 29 million people. We continue to expect that the courts will allow the CFPB to remain a strong and independent agency to protect consumers," said Lisa Donner, Executive Director of Americans for Financial Reform.
"This was a good day for the many Americans who have benefited from the CFPB's work on behalf of American consumers. When Congress set up the CFPB, it made the considered decision that a single director removable only for cause would enable the Bureau to most effectively fulfill its mission, and it looks today like a majority of the DC Circuit is going to rightly conclude that that choice was constitutional,” said Brianne Gorod, Chief Counsel of Constitutional Accountability Center.
"Today’s oral arguments are a reminder of why we must maintain an efficient consumer protection agency. We can't afford to have the crucial work of the CFPB interrupted. Its current structure and leadership has helped millions of families across the country fight against abusive financial practices. The impact of unscrupulous and predatory financial services providers on the communities we serve and represent is well documented and continues to decimate our families and our neighborhoods. The NAACP remains steadfast in our commitment to protect integrity of the CFPB and will continue to work to preserve its strength and independence," said Hilary Shelton, NAACP Washington Bureau and Senior Vice President for Policy and Advocacy.
"Since it opened its doors, the CFPB has worked tirelessly to enforce the laws that went ignored in the run-up to the 2008 financial crisis, and has empowered consumers against predatory, deceptive, and outright fraudulent behavior by bad actors in the financial industry. It is disappointing but not surprising that payday lenders, debt collectors, for-profit colleges, and other industry groups have turned to their allies in Congress and the courts in an effort to weaken the Bureau so they can keep exploiting financially vulnerable Americans, including communities of color still reeling from low wages and underemployment. Last year’s appellate panel ruling against the Bureau was wrong on the law and wrong for consumers, but tomorrow’s hearing before the full D.C. Circuit is an important opportunity to set the record straight," said Wade Henderson, president and CEO, The Leadership Conference on Civil and Human Rights.
“In less than six years, Director Cordray and the CFPB have already begun to rein in unfair, deceptive, and abusive practices in the financial marketplace, helping put Latino families, and all Americans, on a path to greater financial security,” said Lindsay Daniels, Associate Director of Economic Policy at the National Council of La Raza. "Efforts to destroy the agency’s independent leadership or structure jeopardize protections for all consumers. Latinos, in particular, cannot afford the type of lax financial enforcement, supervision, and regulation that gave way to the financial crisis. Instead, Latinos need a strong, independent consumer agency that works to ensure our American economic engine – U.S. workers and consumers – can maintain and build wealth for this generation and the next.”
“This rehearing is an opportunity to right the legal record in favor of a strong consumer protection agency that remains independent,” said John Taylor, President and CEO of the National Community Reinvestment Coalition (NCRC).  "The agency is already designed to be transparent and accountable to the President, the Congress and the public and, so far, the agency’s structure has ensured that it is effective and has avoided industry capture or undue political influence."
“PHH v CFPB is a case between a special interest and the American people. Opponents have spent millions of dollars to gut an agency that has stood up for military families, students, and seniors who have been harmed by financial crimes,” said Rachel Weintraub, Legislative Director and General Counsel at Consumer Federation of America. “The CFPB has returned $12 billion to 29 million consumers. The American people need the CFPB to stand up for them. This case is about pulling the agency down.”
"The CFPB is a highly accountable and effective agency, protecting American families from financial deception and abuse. The court heard that loud and clear today, and should uphold its constitutionality," said Michael Barr, Professor of Law and Public Policy, University of Michigan.
"As the CFPB made clear during the argument, Supreme Court precedent supports the conclusion that the CFPB's leadership structure is constitutional," said Mike Landis, U.S. PIRG's Litigation Director.  "When designing this new agency in the aftermath of the worst financial crisis since the Great Depression, Congress knew that the director needed to be independent and free from political influence.  At the same time, the director is sufficiently accountable to the president because he or she can be removed for specified reasons.  We’re confident that the full D.C. Circuit will see this case for what it is—a special interest attack on an agency that is doing its job too well by standing up for and protecting the millions of consumers across this country.”
"Working families throughout the country have benefited from the CFPB," said Paulina Gonzalez, executive director of the California Reinvestment Coalition. "The Bureau has stopped scammers, protected families from predatory practices, and created accountability for harmful practices. If the CFPB's structure were to be changed because of this case, consumers would be the likely losers."

Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change.




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