Washington roundup as you head into #GAC2025

RIP Independent Agencies?

The Acting Solicitor General sent a letter to Senator Durbin of Illinois explaining that the office will not defend the constitutionality of the Federal Trade Commission , National Labor Relations Board , and the CPSC in future litigation. This posture could have implications for independent agencies not specifically mentioned in the letter, such as the NCUA.

As I explained in a previous roundup, in Humprey’s Executor, the Supreme Court upheld the constitutionality of the FTC against a challenge by President Roosevelt, who wanted to remove its chair. The chairman was appointed to a fixed term and could only be removed for cause. The court upheld Congress’s right to create independent agencies with for-cause restrictions on the executive branch’s power to remove agency heads.

The continued validity of Humphrey’s has been questioned ever since the Supreme Court struck down that portion of the Dodd-Frank Act (see Selia Law) that provided that the Director of the CFPB could only be removed for cause by a president. At the time, the Court chose to distinguish the Bureau, which operates under the direction of a single director as opposed to a board, as is typical for most independent agencies, including the NCUA. A board member recently fired from the NLRB sued the Trump Administration, claiming its actions were illegal. Similar lawsuits are already pending, making it quite likely that the Supreme Court will soon have the opportunity to examine the precedential value of Humphrey’s once again.

Trump Administration Agrees to Fund the CFPB … For Now

The Consumer Financial Protection Bureau ’s Acting Director agreed to restore funding to the Bureau pending the outcome of litigation seeking to block the Trump Administration from firing most of the Bureau’s employees and ending its funding. In a request for a temporary injunction, lawyers representing CFPB employees argued that the actions taken by the Trump Administration to shut down the Bureau were unconstitutional and would harm the laid-off employees. For example, one situation highlighted in the brief was that of an employee who had just found out that their spouse and child both had been diagnosed with cancer.

Regardless of where you fall on the political spectrum, the Trump Administration’s actions to unilaterally defund agencies created by Congress raise fundamental constitutional issues; this may very well be one of the cases that the Supreme Court considers when it inevitably rules on the legality of these actions. In addition to highlighting the personal impact of these actions, the plaintiffs in this case argue that the Administration’s actions violate several provisions of the Constitution. 纽约时报 reports today that the first such case has been filed with the Court.

Congress Moves to Rescind CFPB Overdraft Rule

Even as the Trump Administration attempts to defund the Bureau, Congress is looking to rescind some of its most onerous regulations. The Chairmen of the House and Senate banking committees introduced a resolution calling on Congress to rescind regulations promulgated by the CFPB mandating that institutions with $10 billion or more in assets treat overdraft products as loans under Reg Z and provide the required disclosures. While the regulation will only apply to large credit unions, if and when it takes effect, there is nothing to prevent the same framework from being imposed on smaller financial institutions. In promulgating the regulation, the CFPB proclaimed that it was closing a “loophole.” In fact, it was reversing a longstanding policy judgment that encouraged financial institutions to offer overdraft protection by exempting these products from compliance with the Truth in Lending Act.

Don't Expect the Fed To Cut Interest Rates Again Anytime Soon

This week, the U.S. Bureau of Labor Statistics reported that inflation rose 3% over the last year, a slightly higher increase than anticipated. In addition, other individual categories rose at an even faster rate. This news makes it even less likely that the Federal Reserve will cut rates anytime soon. In testimony before Congress, Fed Chairman Jerome Powell indicated he was comfortable leaving interest rates where they are. "The economy is strong, the labor market is solid and we have the luxury of being able to wait and let our restrictive policy work to get inflation coming down again. And that's what we're doing," Powell said.

What a World Without the CFPB Would Mean for Your Credit Union by Yours Truly.

Last but not least, here is a recent article I wrote for The Credit Union Connection warning credit unions against taking too much pleasure in the Bureau's potential demise.

#government #Washington #lobbying #regulation #compliance

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