Trump administration fights its own
agency in U.S. court
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[March 18, 2017]
By Lisa Lambert
WASHINGTON (Reuters) - The Trump
administration took an unusual step on Friday in its efforts to defang
the U.S. financial consumer watchdog created after the banking crisis,
with the executive branch of the federal government telling a court that
one of its own agencies is violating the U.S. Constitution.
The Justice Department filed a brief opposing the Consumer Financial
Protection Bureau's appeal of a ruling that its single-director
structure does not hew to the constitution.
The decision that the bureau appealed also said the president should
have the power to fire the agency's head at will. Under the 2010
Dodd-Frank Wall Street reform law that created the CFPB to protect
individuals against fraud in lending, the president can only fire the
agency director for cause.
The CFPB director is currently Obama appointee Richard Cordray, hailed
by consumer advocates for taking action against payday lenders, credit
card companies and debt collectors. Many bankers and Wall Street
executives, along with Republican lawmakers, have said his authority to
both write and enforce regulations is too wide.
The agency can represent itself in court cases except for those before
the Supreme Court, putting President Donald Trump in a rare predicament:
he cannot direct the Justice Department to withdraw the appeal.
Instead, the Justice Department could only file a brief supporting the
CFPB's opponent, mortgage company PHH Corp.
"A single-headed independent agency presents a greater risk than a
multi-member independent commission of taking actions or adopting
policies inconsistent with the Presidentís executive policy," the
Justice Department argued, saying a commission must compromise, while a
single director does not answer to anyone.
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President Donald Trump speaks during a joint news conference with
German Chancellor Angela Merkel in the East Room of the White House
in Washington, U.S., March 17, 2017. REUTERS/Joshua Roberts
The department also said that because CFPB directors hold five-year
terms, a president may not get a chance to appoint someone who
agrees with him. Cordray's term expires next year.
The department argued the U.S. Court of Appeals for the District of
Columbia Circuit should allow Trump to fire the director at will,
upholding the original decision reached by a three-member panel of
its judges in October.
No U.S. president has ever dismissed an independent agency's
director for cause. Republican lawmakers say Cordray's history
provides Trump with cause for dismissal, although some are seeking a
legislative path to fire him.
The rare inter-agency legal fight was widely expected.
After Trump's election win, some states' attorneys general and
Democrats in Congress sought permission to represent the CFPB in the
appeal, anticipating Trump would try to undermine the agency.
(Editing by David Gregorio)
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