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from the monies collected by the Federal Reserve as interest on U.S. government $103 million fine; the appeals court
securities it holds, as well as for providing check clearing and other payment sent that matter back to the lower
services to financial institutions. court for reconsideration.

PHH Corp., a mortgage company fined over $100 million by the CFPB for allegedly CFPB structure questioned
taking kickbacks on mortgage insurance, challenged the constitutionality of the
agency along with its fine. Upon being rebuked by a federal district court, PHH However, the appeals court did
took the matter to the U.S. Court of Appeals for the District of Columbia, which agree the CFPB leadership structure
dealt the company a partial victory Oct. 11. The appeals court ruling does not is unconstitutional. Its ruling means
address the constitutionality of the CFPB itself. Nor does it negate the PHH's that going forward the CFPB's direc-
tor must report directly to the presi-
dent, who will now have veto power
over CFPB rulings and authority to
fire the director at will.

"Because the CFPB is an independent
agency headed by a single director
and not by a multi-member com-
mission, the director of the CFPB
possesses more unilateral authority
– that is authority to take action on
one's own, subject to no check – than
any single commissioner or board
member in any other independent
agency of the U.S. government," the
opinion stated. "Indeed … the direc-
tor enjoys more unilateral authority
than any other officer in any of the
three branches of the U.S. govern-
ment, other than the president. …
At the same time, the director of the
CFPB possesses enormous power
over American business, American
consumers and the overall U.S. econ-
omy."

Reaction to the ruling was swift.
Senator Deb Fischer, R-Neb., who au-
thored legislation that would replace
the single director with a bipartisan
board, said the ruling reinforces the
need for a legislative remedy. Rob
Nichols, President and Chief Execu-
tive Officer of the American Bankers
Association, agreed. "We've long be-
lieved that a five-member, bipartisan
commission … would strike a rea-
sonable balance between indepen-
dence and accountability," Nichols
said, adding that a board or commis-
sion "would provide necessary and
appropriate checks and balances" on
the CFPB's authority.

Senator Elizabeth Warren, D-Mass.,
largely credited with drafting provi-
sions of the Dodd-Frank Act creating
the CFPB, blasted the ruling. It "bi-
zarrely relies on a mischaracteriza-

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