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The Future of the CFPB Is Not Necessarily as Bleak as It Looks

The Consumer Financial Protection Bureau requested an en banc review in November by the U.S. Court of Appeals for the District of Columbia. If granted, the decision of the three-judge panel finding that the CFPB's structure is unconstitutional would be reevaluated by a full panel of 11 judges. More importantly, however, by requesting the en banc review, the Court of Appeals' decision is stayed.

In other words, the ruling which permits the president to remove at will Richard Cordray as director is not enforceable until the full panel of the court rejects the en banc request or renders an actual decision. This is particularly significant since most agree that President-elect Trump would replace Director Cordray immediately if — consistent with the three-judge panel decision — he is removable at will. However, since that decision is now on hold, Cordray can only be removed for cause unless and until the Court of Appeals reaffirms its prior opinion.

In terms of the CFPB's ultimate prospects for success, it is important to note that the prior decision was a 2-1 split with one of the judges finding that the Court did not need to breach the issue of the CFPB's constitutionality. Importantly, all three judges who decided the case were nominated by former President George W. Bush. Of the remaining eight judges on the full panel, seven were nominated by President Barack Obama or former President Bill Clinton. Obviously, that represents a dramatic political shift from the three-judge panel that ruled against the CFPB.

This raises the prospect that if the Court were to hear the case en banc and rule on party lines, Cordray would not be removable except for cause. Thus, Cordray could remain at the CFPB until 2018 — right around the time of new congressional elections. The outcome of this case may have a great impact on the extent to which President-elect Donald Trump can have an impact on the CFPB prior to midterm elections. After those elections, it is anyone's guess what might transpire.

Ari Karen is a partner at Offit Kurman and CEO ofStrategic Compliance Partners.

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