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Judge rules structure of consumer finance agency unconstitutional

Mick Mulvaney, White House budget chief and acting director of the Consumer Financial Protection Bureau
Mick Mulvaney, White House budget chief and acting director of the Consumer Financial Protection Bureau. Photo: Cheriss May/NurPhoto via Getty Images

A federal judge in New York ruled on Thursday that structure of the Consumer Financial Protection Bureau, the watchdog agency created in the aftermath of the 2008 national financial crisis, is unconstitutional.

The details: Judge Loretta Preska wrote that it's unconstitutional that the agency, headed by a director with a five-year term, could be fired by the president only for cause. The Trump administration had insisted that the president should have the authority to remove the agency’s leader at will.

  • This conflicts with a majority ruling in January by the nine-member panel of the U.S. Court of Appeals in Washington, which said the watchdog agency director's power is not excessive and the president shouldn't have more authority to fire that person.

The backdrop: The agency has been embroiled in political disarray after its director Richard Cordray, an Obama appointee, stepped down in November before his five-year term ended. Trump named White House budget director Mick Mulvaney as his replacement, but Leandra English, the agency’s deputy director under Cordray, said she should have been named acting director.