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How does the PHH case impact presidential authority to remove Director Cordray?

Posted in CFPB General

A blog post entitled “The President’s Removal Power and the PHH Litigation” by Aditya Bamzai, an Associate Professor of Law at the University of Virginia School of Law, challenges the assumption of many observers that the new President would have to let the PHH litigation run its course before acting to remove Director Cordray.

As we reported, the CFPB has filed a petition with the D.C. Circuit asking it to grant a rehearing en banc of its PHH decision.  In PHH, the D.C. Circuit ruled that that the CFPB’s single-director-removable-only-for-cause structure is unconstitutional.  To remedy the constitutional defect, the court severed the removal-only-for-cause provision from the Dodd-Frank Act so that the President “now has the power to supervise and direct the Director of the CFPB, and may remove the Director at will at any time.”  The decision has not become effective because the D.C. Circuit issued an order directing the Clerk of the Court of Appeals to “withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing or petition for rehearing en banc.”

In his blog post, Professor Bamzai asserts that the new President could remove Director Cordray before the appeal is resolved and any judgment becomes effective if the Executive Branch determines that the statutory “for cause” restriction on removal is unconstitutional.  He also asserts that Director Cordray could not insist that he be allowed to remain in office following a presidential order to vacate it.

We found Professor Bamzai’s blog post to be quite thoughtful but have not conducted independent research to assess the strength of his arguments.