The decision is a victory for Republicans and a conservative movement dedicated to dismantling the regulatory state, but their allies in the business community are more ambivalent about the potential effects of a decision that could undermine a host of regulations — and legal safe harbors — that the industry has planned around for more than a decade.
“Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” Judge Cory Wilson wrote for the panel of three Trump-appointed judges who heard the case. Many rules issued by the CFPB are meant to create legal certainty for businesses, including safe harbors related to debt collection practices and mortgage issuance.
Jeff Ehrlich, former deputy enforcement director at the CFPB and partner at McGuireWoods, told MarketWatch that the Dodd-Frank financial reform law which created the agency also gives state attorneys general the power to enforce new protections. In May, a panel of the 5th Circuit Court of Appeals issued an opinion that said that Congress had violated the Constitution when it delegated the authority to the Securities and Exchange Commission to decide whether to bring enforcement actions in federal court or in an in-house administrative law tribunal.
There’s a reason the GOP packed the courts under trump—to undermine the power of congress and dismantle the federal government by judicial fiat.