On January 31, a federal appellate court upheld the constitutionality of the Consumer Financial Protection Bureau (CFPB) as an independent regulatory agency with a director who can be dismissed only for “inefficiency, neglect of duty, or malfeasance in office.” That structure — spelled out in the Dodd-Frank financial reform law of 2010 — had been challenged by a New Jersey mortgage lender in a lawsuit contesting a CFPB enforcement action over kickbacks and inflated fees. The D.C. Court of Appeals rejected PHH’s argument.

“Congress’s decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,” the court ruled. “We have no warrant here to invalidate such a time-tested course. No relevant consideration gives us reason to doubt the constitutionality of the independent CFPB’s single-member structure.”

Here are some key points made in the majority opinion by Judge Cornelia Pillard:

Congress had sound reasons for deciding on a single director rather than a commission, and for shielding the CFPB director against dismissal without cause.

“Congress designed an agency with a single Director, rather than a multi-member body, to imbue the agency with the requisite initiative and decisiveness to do the job of monitoring and restraining abusive or excessively risky practices in the fast-changing world of consumer finance… A single Director would also help the new agency become operational promptly, as it might have taken many years to confirm a full quorum of a multi-member body.”

“By providing the Director with a fixed term and for-cause protection, Congress sought to promote stability and confidence in the country’s financial system.”

There are many legal precedents for this kind of protection.

The [Supreme] Court has held, time and again, that while the Constitution broadly vests executive power in the President, U.S. Const. art. II, § 1, cl. 1, that does not require that the President have at-will authority to fire every officer.”

The “removal restriction” established for the CFPB “is wholly ordinary.” The language of the statute is identical to that of a law “approved by the Supreme Court back in 1935 in Humphrey’s Executor and reaffirmed ever since.”

There is nothing in the Constitution or case law to suggest that an independent agency needs a “multi-headed structure” for the sake of accountability.

That argument “finds no footing in precedent, historical practice, constitutional principle, or the logic of presidential removal power.”

The CFPB is not uniquely powerful or free of restraint.

“Today’s independent agencies are diverse in structure and function…. [T]he CFPB’s power and influence are not out of the ordinary for a financial regulator or, indeed, any type of independent administrative agency.”

A single director is in some respects easier to hold accountable.

“Decisional responsibility is clear now that there is one, publicly identifiable face of the CFPB who stands to account—to the President, the Congress, and the people— for all its consumer protection actions. The fact that the Director stands alone atop the agency means he cannot avoid scrutiny through finger-pointing, buck-passing, or sheer anonymity. “

Effective mechanisms exist for holding the CFPB accountable. Its actions are subject to veto by the Financial Stability Oversight Council and to review by the courts.

The Second Circuit has itself affirmed a lower court’s decision to overturn a $109 million penalty imposed on PHH, agreeing that the CFPB misinterpreted the law. “The now-reinstated panel holding that invalidated the disgorgement penalties levied against PHH… illustrates how courts appropriately guard the liberty of regulated parties when agencies overstep.”

The budgetary autonomy given to the CFPB is also not unique.

“Congress has provided similar independence to other financial regulators, like the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Federal Housing Finance Agency, which all have complete, uncapped budgetary autonomy.”

There is a long tradition of taking extra measures to ensure the independence of financial oversight agencies.

“[T]he CFPB Director’s autonomy is consistent with a longstanding tradition of independence for financial regulators, and squarely supported by established precedent. The CFPB’s budgetary independence, too, is traditional among financial regulators, including in combination with typical removal constraints. PHH’s constitutional challenge flies in the face of the Supreme Court’s removal-power cases, and calls into question the structure of a host of independent agencies that make up the fabric of the administrative state.”

“That independence shields the nation’s economy from manipulation or self-dealing by political incumbents and enables [independent] agencies to pursue the general public interest in the nation’s longer-term economic stability and success, even where doing so might require action that is politically unpopular in the short term.”

The CFPB’s structure poses no threat to normal presidential authority over “core executive” functions. But if the courts accepted PHH’s arguments against the CFPB, the whole idea of independent regulatory agencies would be threatened.

“The threat PHH’s challenge poses to the established validity of other independent agencies, meanwhile, is very real. PHH seeks no mere course correction; its theory, uncabined by any principled distinction between this case and Supreme Court precedent sustaining independent agencies, leads much further afield. Ultimately, PHH makes no secret of its wholesale attack on independent agencies—whether collectively or individually led—that, if accepted, would broadly transform modern government.”

“The President’s plenary authority over his cabinet and most executive agencies is
obvious and remains untouched by our decision. It is PHH’s unmoored theory of liberty that threatens to lead down a dangerously slippery slope.”

U.S. Senator Jeff Merkley yesterday warned that Mick Mulvaney’s actions as the unlawful acting head  of the Consumer Financial Protection Bureau is destroying the bureau’s ability to stop predatory lending – the infamous “debt trap.”

“The CFPB has become the ‘Corporate Financial Protection Bureau’ under Mick Mulvaney as it abandons efforts to stop the debt trap,” Merkley said in a call with reporters.

Merkley spoke on a call organized by the Center for Responsible Lending and Americans for Financial Reform. Merkley was joined by Rev. Willie Gable Jr., head pastor at the Progressive Baptist Church in New Orleans, Yana Miles, senior legislative counsel at the Center for Responsible Lending, and Jose Alcoff, from the Stop The Debt Trap campaign.

Payday lending involves small-dollar loans at exorbitant interest rates, averaging 391 percent APR nationally, with rates regularly reaching or exceeding 500 percent and even 1,000 percent APR. These loans trap borrowers into a cycle of debt where they cannot escape, targeting the most financially vulnerable communities.

“This predatory business model is designed to target the poor, and keep them in the cycle of debt,” Gable said.

Contrary to consumer bureau’s mission, Mulvaney has dropped cases against lenders that either charge illegal annual interest rates of up to 950 percent in 17 states, and have a long track record of abusing consumers. One of these lenders, the World Acceptance Corp,  had donated $4,500 to Mulvaney’s past election campaigns .

Long before Mulvaney joined the White House as the director of the Office of Management and Budget, he was a shill for payday loan sharks, an industry that has fought the consumer bureau tooth and nail since the agency started, and is now trying to cash in on the Trump administration. Mulvaney took $63,000 from them over the course of his election campaigns.

Hacking away the consumer bureau’s efforts to stop payday lending is only one of the ways Mulvaney has harmed consumers during the 75 days since President Trump installed him as the bureau’s acting head. “His continued effort to undermine the integrity of the consumer bureau will have lasting and damaging effects on working families across the country,” Miles said.

Merkley said that Mulvaney is “blatantly trying to dismantle the bureau from the inside,” and called on supporters of the bureau to fight back.

“If this isn’t a crystal-clear example of the Trump administration governing of, by, and for the powerful rather than of, by, and for the people, then I don’t know what is,” Merkley said. “This is exactly the opposite of what Trump promised during his election campaign. He is standing up for predatory Wall Street practices, instead of standing up for our working Americans. We need to change that.”

A majority of Americans, including coalition of congregations, civil rights groups, unions, consumer advocates, and others, would like to see consumer bureau’s work continue, according to a poll released by AFR and CRL. Mulvaney needs to let the consumer bureau do the excellent job it did under the previous director. “Trump needs to nominate a director with a track record of protecting consumers, one who can earn bipartisan support in the Senate,” Alcoff said.

After the U.S. government bailed out the banks in 2008, they bounced back quickly even as ordinary Americans lost their homes and jobs.

In the last year, banks have seen record profits; we have learned about a series of outrageous and widespread customer abuses by Wells Fargo; and millions of Americans had their personal data exposed to hackers because of a security breach at credit bureau Equifax.

Now, Congress may hand banks billions of dollars of tax breaks at everyone else’s expense.

They’re marking up a bill that, under the fig leaf of some token gestures toward consumer protection, would deliver early holiday gifts to banks large and small.

The Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) would sharply cut back the post-crisis mandate that regulators provide enhanced oversight to a set of very large banks. In fact, the bill removes that mandate for 25 of the 38 largest banks.

Together, these banks account for over $3.5 trillion in banking assets, more than one-sixth of the U.S. total. They got about $47 billion in bailout funds during the crisis. Yet, this legislation would give the green light to Trump regulators to ease off on regulation, inviting a return to the pre-financial crisis world where regulators dropped the ball on bank oversight.

That’s not the only way this legislation weakens post-crisis reforms. It would strip away multiple mortgage-lending protections, especially for buyers of manufactured homes (aka mobile homes), who are likely to face higher costs.

It would limit consumer protections for customers of banks with less than $10 billion in assets, including loan disclosures, anti-foreclosure safeguards and other protections against shady lending.

It would create a new loophole in the Volcker Rule that would open the door for small and medium-sized banks to engage in reckless, speculative trading with customer deposits.

Against all these sugar plums for industry, S.2155 includes only minor benefits for consumers, such as one free freezing and unfreezing of their credit per year. The small number of very limited consumer measures don’t even begin to counterbalance the impacts of bank deregulation. How about a focus on the pressing economic needs of individuals and communities instead?

Supporters of S.2155 argue that it’s acceptable because it doesn’t include some of the biggest items on Wall Street’s wish list. We are glad that increased public attention to the impact of banking rules on all of our financial security is creating some constraints on giveaways. But whether or not Wall Street gets everything it wants in this bill is not the right standard.

Banks are not suffering — quite the contrary. There is no evidence that financial regulation is harming the workings of the economy for most people. The latest data from the Federal Deposit Insurance Corporation — for the third quarter of this year — showed a 5-percent increase in profits over the same period last year.

Community banks recorded a 9-percent increase. Those increases are after banks showed record-setting revenues last year. Over 95 percent of community banks turned a profit in 2016, up from 78 percent in 2010, the year the Dodd-Frank Act was passed.

Ordinary American families saw no such increase in their earnings this year. But they’re taking one on the chin at the other end of Pennsylvania Ave. as the Trump administration attempts to hamstring the Consumer Financial Protection Bureau by trying to install someone as director who has said it should not exist.

The work they are trying to disrupt? This agency, only 6 years old, has won $12 billion in relief for over 29 million American consumers.

These attacks are all the more reason for Congress to be focused on the public interest and consumer protection.

With the Trump administration appointing industry-friendly regulators, supporting this bill sends the message that members of Congress want to join the push in that direction and that even though banks are doing fine, policymakers should put their demands ahead of the stability of the financial system and the welfare of the public.

There is still time to stop this bill. There has been no hearing on the legislation, and as issues are brought to light in the markup, Senators should remove themselves as co-sponsors. Senators should not allow it to be jammed though as an attachment to must-pass legislation.

At a bare minimum, the public deserves an open debate on the Senate floor.

The job of the U.S. Senate is to legislate on behalf of the American people as a whole. Senators should be choosing to fight for tougher rules to hold big banks accountable, for better protections of consumer data and for relief for student-loan borrowers, instead of prioritizing the interests of finance over those of ordinary Americans.

Lisa Donner is the executive director of Americans for Financial Reform, a progressive organization that advocates for financial reform in the United States, including stricter regulation of Wall Street.

This piece first appeared in the Dec 5th edition of The Hill