The Yale Law Journal

D.C. Circuit Opinion Finding CFPB Structure Unconstitutional Cites Volume 121 Essay

Cody Knapp
14 Nov 2016

On October 11, the U.S. Court of Appeals for the D.C. Circuit cited Joshua D. Wright’s Volume 121 Essay[1] in an important separation of powers case, PHH Corp. v. CFPB.[2] In a split decision, the panel held that the structure of the Consumer Financial Protection Bureau (CFPB), as established by the Dodd-Frank Act of 2010,[3] violated Article II.[4] Writing for the court, Judge Brett Kavanaugh reasoned that the Act improperly broke with historical practice by constituting, for the first time in history, an independent agency under a single Director, only removable for cause,According to Judge Kavanaugh, this structure made the CFPB Director the most powerful person in the United States government, aside from the President.[5]


In 2014, the Consumer Financial Protection Bureau fined PHH, a mortgage company, for violating Section 8 of the Real Estate Settlement Procedures Act[6] by referring its borrowers to mortgage insurers who obtained reinsurance from a PHH subsidiary.[7] Reversing prior Department of Housing and Urban Development interpretations of Section 8, the Bureau applied its own interpretation retroactively and ordered PHH to pay $109 million in disgorgement.[8] In response, PHH brought a constitutional claim against the CFPB.[9]


In his Essay, The Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other, Wright identifies “a significant likelihood that the [CFPB]’s policy goals will be subject to the whim and idiosyncratic views of a single individual.”[10] Judge Kavanaugh cited this language to distinguish the multi-member bodies that have traditionally led independent agencies from CFPB’s single-director structure.[11] To remedy this constitutional defect, the court struck down Dodd-Frank’s for cause provision, thus making the CFPB Director removable at-will by the President.[12]


[1] Joshua D. Wright, The Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other, 121 Yale L.J. 2216 (2012).

[2] PHH Corp. v. Consumer Fin. Protection Bureau, No. 15-1177, 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016).

[3] 12 U.S.C. § 5491 (2012).

[4] PHH Corp., 2016 WL 5898801, at *4.

[5] Id., at *11.

[6] 12 U.S.C. § 2607 (2012).

[7] PHH Corp., 2016 WL 5898801, at *7.

[8] Id.

[9] Id.

[10] Wright, supra note 1, at 2260 (internal quotation marks and citation omitted).

[11] PHH Corp., 2016 WL 5898801, at *18-*22.

[12] Id., at *4.