Last week’s Appeals Court ruling strikes at the heart of the authority of the Consumer Financial Protection Bureau. While most of the media attention has focused on the court’s holding that the CFPB’s organizational structure is unconstitutional, the court made two other critical rulings that put a stop to the CFPB’s aggressive exercise of its enforcement authority.
The decision is also noteworthy for its tone. The DC Circuit is the Court of Appeals that primarily hears appeals from administrative decisions and determines whether the agency has acted correctly. It is not unusual for the court to reverse an agency’s decision or to vacate its actions. But here, the unanimous court went further, as it was harsh in its criticisms of the CFPB and questioned the agency’s commitment to following the rule of law. Such a decision is very rare.