In response to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray’s administrative decision ruling that it had to pay a $109 million penalty for its reinsurance scheme by Aug. 5, PHH Corp. has asked the U.S. Court of Appeals for the District of Columbia to stay the decision while it appeals.
On Aug. 3, the motions panel granted that request, finding that PHH had “satisfied the stringent requirements for a stay pending appeal.”
PHH also is challenging the CFPB’s constitutionality, arguing that the single-director structure is a violation of the Constitution’s separation of powers. State National Bank in Texas recently was granted standing and ripeness from the U.S. Court of Appeals for the District of Columbia to challenge the CFPB’s constitutionality under similar grounds.
In its petition to stay the administrative decision, PHH argued that “[t]he director is not answerable to the president (he is removable only for cause) or Congress (he has sole power to fund his agency from the Federal Reserve System’s operating expenses).” The petition added that “[n]ever before has so much authority been consolidated in the hands of one individual shielded from the president’s control and Congress’s power of the purse.”
The CFPB already defeated two constitutional challenges as the trial court level in its cases against Morgan Drexen, which filed for bankruptcy earlier this year, and ITT Educational Services.
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