oversight and investigations

The Subcommittee on Oversight and Investigations of the House Committee on Financial Services has scheduled a hearing for tomorrow entitled “The Bureau of Consumer Financial Protection’s Unconstitutional Design.”  The memo from the Committee’s Majority Staff to Committee Members states that “the [h]earing will examine whether the structure of the Bureau violates the Constitution as well as structural changes to the Bureau to resolve any constitutional infirmities.”

The hearing will undoubtedly cover the same constitutional issues that are being briefed and will be argued on May 24, 2017 by the parties and their amici before the en banc D.C. Circuit in PHH Corporation v. Consumer Financial Protection Bureau, September Term, 2016, No. 7151177.

The following witnesses will testify:

  • Ted Olson, Partner, Gibson, Dunn & Crutcher, LLP
  • Professor Saikrishna Prakash, James Monroe Distinguished Professor, University of Virginia School of Law
  • Adam White, Research Fellow, Hoover Institution
  • Brianne Gorod, Chief Counsel, Constitutional Accountability Center

Mr. Olson is lead counsel to PHH.

According to his bio on the website of the University of Virginia School of Law, Professor Prakash “focuses on separation of powers, particularly executive powers.”  As his 2013 law review article underscores, Professor Prakash strongly advocates in favor of robust Presidential powers. He is a colleague of Aditya Bamzai, an Associate Professor of Law at the same law school.  Professor Bamzai drew attention to himself when he posted a blog on November 22 of last year in the Yale Journal of Regulation and the ABA Section of Administrative Law & Regulatory Practice entitled “The President’s Removal Power and the PHH Litigation.”  We blogged about Professor Bamzai’s blog in which he argued that President Trump could lawfully remove Director Cordray without cause and need not await the outcome of the PHH case.

At the time of Professor Bamzai’s post, the D.C. Circuit had not yet granted the CFPB’s petition for rehearing en banc. The order granting the petition vacated the panel decision that held that the CFPB was unconstitutionally structured and severed the language from Title X of Dodd-Frank which enables the President to remove the Director only for cause, thus enabling the President to remove the Director without cause

It is unknown whether Professor Banzai still adheres to his opinion in light of the fact that the panel opinion has been vacated and, more importantly, whether Professor Prakash shares Professor Bamzai’s opinion.

Adam White’s bio describes Adam as a research fellow at Hoover Institution “writing on the courts and the administrative state for such publications as The Weekly Standard, The Wall Street Journal, Commentary, the Harvard Journal of Law & Public Policy…”  According to its website, “Hoover Institution seeks to improve the human condition by advancing ideas that promote economic opportunity and prosperity, while securing and safeguarding peace for America and all mankind.”  It is fair to characterize Hoover Institution as a conservative think tank.   Mr. White recently testified before the Senate Committee on Commerce, Science, and Transportation at a hearing entitled:  “A Growth Agenda:  Reducing Unnecessary Regulatory Burdens.”  In his testimony, he mentioned that he and his then law firm colleagues were co-counsel to a small community bank in State National Bank of Big Spring v. Lew which in a federal lawsuit challenged the CFPB’s structure as being unconstitutional.  We have blogged about that case on numerous occasions.

It seems clear that Brianne Gorod was chosen as a witness by the Democrats in order to balance the views of the other witnesses.  According to its website, the Constitutional Accountability Center “is a think tank, law firm and action center dedicated to fulfilling the progressive promise of our constitution’s text and history.  We work in our courts, through our government, and with legal scholars to preserve the rights and freedoms of all Americans and to protect our judiciary from politics and special interests.”

We will watch the hearing with interest and blog about it later this week.

Three members of the House Committee on Financial Services have sent a letter dated May 2, 2012 to Director Cordray to express their dissatisfaction with Mr. Cordray’s March 26 response to their February 22 written request for budget information. That information was sought as a follow up to Director Cordray’s testimony to the Subcommittee on Oversight and Investigations on February 15, 2012.

Authored by Randy Neugebauer, Chairman of the Subcommittee, Michael Fitzpatrick, Vice-Chairman of the Subcommittee, and James Renacci, the letter asserts that that “the CFPB has been wholly unresponsive” to their information request. The letter stresses the need to monitor the CFPB’s budget, noting that “every dollar the Fed sends to CFPB is one less dollar that can be used toward deficit reduction.”

The letter renews the Committee’s request for copies of any financial operating plans and forecasts, which the letter indicates are not interchangeable with the CFPB’s FY 2013 Budget Justification referred to by Director Cordray in his March 26 response. In its February 22 letter to Director Cordray, the Committee had expressed its view that the Budget Justification “lacked sufficient detail and was unnecessarily vague.” In the May 2 letter, the Committee states that Mr. Cordray’s response that the justification was substantially similar to other non-appropriated banking regulators represented an “inapposite” comparison because the budgets of non-appropriated banking regulators “do not affect the national debt.”

The letter also seeks (1) release of the CFPB’s written performance measures on or before July 21, 2012, (2) the CFPB’s agreement to provide transfer requests to Congress 48 hours prior to officially requesting a transfer of funds from the Fed, (3) a detailed construction and rehabilitations budget for the CFPB’s DC offices, and (4) written specifics on the CFPB’s “detailed process” for determining employment needs. Director Cordray is asked to provide the requested information by May 16.