Consumer Financial Protection Bureau chief Richard Cordray won a reprieve Thursday in his effort to keep his job and retain his agency’s independence.
A federal appeals court said it would reconsider its earlier ruling that would have increased the president’s authority over the consumer watchdog agency, created by the 2010 Dodd-Frank financial reform act that President Trump has vowed to overhaul.
The banking industry has viewed the bureau as a thorn in its side and accused it of overreaching in its regulation, while Republican members of Congress have fiercely criticized the agency, saying it is unaccountable. This month, two Republican senators asked Trump to fire Cordray, calling him “King Richard.”
A divided three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, in a case brought by a mortgage company that had been penalized by the agency, ruled in October that the way the CFPB was established violates the Constitution’s separation of powers by limiting the president’s ability to fire its director.
The 2-1 decision would have given Trump the power to fire Cordray at will. Cordray is a Democrat and Obama appointee whose five-year term doesn’t end until next year.
But the full appeals court said Thursday it would grant a request from the bureau to throw out that ruling and hear arguments in the case again on May 24.
The law creating the independent agency says its director can only be removed “for cause,” such as neglect of duty, and not over political differences. The three-judge panel said that conflicts with the Constitution, which allows the president to remove executives for any reason.
That panel suggested that the problem could be solved by taking out the “for cause” provision — giving the president the power to remove the director at will, and to supervise him or her.
Cordray has run the agency since it began operating. His term doesn’t expire until next year.
As the agency’s director, Cordray exercises more power than would be the case with a five-member commission, which is often the structure that governs independent federal agencies. The members of such commissions normally are split between the political parties.
Under Cordray’s leadership, the agency has aggressively taken action against banks, mortgage companies, credit card issuers, payday lenders, debt collectors and others.
The CFPB says that over five years it has recovered $11.7 billion that it returned to more than 27 million harmed consumers.