April 11, 2016

Jonathan Pompan quoted in Law360 on latest constitutional challenge to CFPB

2 min

Venable partner Jonathan Pompan was quoted in an April 11, 2016 Law360 article on the latest challenge to the Consumer Financial Protection Bureau's (CFPB) constitutionality. The latest challenge stems from a fight over the bureau's interpretation of mortgage regulations after it assessed a $109 million penalty against a New Jersey-based mortgage firm. Following an appeal to the DC Circuit, a three-judge panel warned the CFPB to prepare for questions about the president’s ability to remove its director and how they should view an administrative agency led by a single director instead of a commission.

"Those questions have been hanging over the CFPB since its inception in the 2010 law, and if the D.C. Circuit rules against the bureau, that could fundamentally alter the way the bureau operates," said Pompan. He added that the CFPB's director "is potentially going to have to address questions that go to the core of his authority, which really hadn't been at the forefront of the PHH case until now."

No matter how the court ultimately rules, Pompan said other plaintiffs could challenge the bureau's authority in the future. "This is a good case study in the importance of companies that are subject to enforcement actions to strongly consider litigation given the CFPB's desire for settlements that have a widespread impact."