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DOJ urges federal court to find key provision in Dodd Frank Act unconstitutional

[JURIST] The Department of Justice (DOJ) [official website] on Friday filed an amicus curiae brief [text, PDF] urging the US Court of Appeals for the DC Circuit [official website] to find the for-cause only removal provision of the Dodd Frank Act [PDF] unconstitutional. Stated differently, the brief requests the court to recognize the US president's executive authority to remove single-head-directors of federal agencies on entirely discretionary reasons. In the underlying case, a New Jersey mortgage company is challenging the Consumer Financial Protection Bureau's (CFPB) [official website] authority to fine it over $100 million. The DC Circuit already ruled against [JURIST report] the CFPB in October, but vacated that order by granting the CFPB a rehearing. The CFPB is currently headed by Richard Cordray [official profile], a democrat and former Ohio attorney general. Under the for-cause removal provision of Dodd Frank, the president does not have the authority to fire Cordray, a structure which the DOJ asserts violates the separation of power clause [LII backgrounder] of the Constitution.

The US banking industry has come under fire [JURIST op-ed], and greater regulation, since the 2008 economic downturn. As part of greater regulation, the Obama Administration developed the CFPB. The CFPB came under fire during Trump's campaign, which promised less regulation for businesses. In an unsuccessful attempt to defend the bureau in early February, requests to intervene in defense of the CFPB by sixteen states were denied [JURIST report] by the DC Circuit. Due to the bureau's history of strictly enforcing financial regulations, often leading to multi-million dollar fines such as the $727 million fine [JURIST report] levied against Bank of America, US President Donald Trump [official website] had vowed to wholly dismantle the CFPB, although this brief has somewhat scaled back on that position in favor of merely challenging the for-cause removal provision.

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