D.C. Circuit Delivers A Major Setback To The CFPB

On October 11, the D.C. Circuit issued a major decision holding the structure of the Consumer Financial Protection Bureau (CFPB) unconstitutional and sharply limiting the CFPB's enforcement powers. The decision granted a sweeping victory to PHH Corporation and its affiliates (PHH) in their appeal of an administrative decision by CFPB Director Richard Cordray, which found that PHH's captive reinsurance arrangements violated the Real Estate Settlement Procedures Act (RESPA) and imposed disgorgement of over $109 million. The D.C. Circuit vacated Director Cordray's decision and remanded the matter to the CFPB for additional proceedings. Judge Kavanaugh authored the opinion, and was joined by Senior Judge Randolph. Judge Henderson dissented from the majority's decision on the constitutional issue, but joined the majority's resolution of the RESPA issues.