Dodd-Frank suits could bring important precedents: CUNA
WASHINGTON (4/7/16)--The Credit Union National Association (CUNA) is monitoring cases in federal courts in Washington, D.C., challenging the Dodd-Frank Act, that could create important precedents for those under the jurisdiction of Dodd-Frank, and those looking to challenge it.
Both PHH Corp. and MetLife Inc. have challenged certain aspects of Dodd-Frank, including actions of the Consumer Financial Protection Bureau (CFPB).
On April 12, the U.S. Court of Appeals for the District of Columbia will hear oral arguments in PHH Corp.’s challenge to a $109 million enforcement actionin June 2015. The CFPB alleged that PHH accepted kickbacks in the form of mortgage reinsurance premiums.
This case is the first challenge to a CFPB administrative action. When the action was first decided by an administrative law judge, PHH was handed a $6 million fine. After PHH pushed back against the decision, the CFPB increased the fee, to $109 million.
An American Banker report from earlier this week said that two appeals court judges raised constitutional questions about the structure of the CFPB, especially focusing on its leadership by a single director.
These questions seem to indicate that the court may be considering whether there is a valid constitutional challenge to the structure of the CFPB.
Last month, MetLife won a challenge to its nonbank “systemically important financial institution” (SIFI) designation by the Treasury’s Financial Stability Oversight Council (FSOC). Large nonbanks can receive such designations if the FSOC determines these companies could pose threats to the financial stability of the United States.
The SIFI designation gives the Federal Reserve board supervisory and regulatory powers over the consolidated institution.
The full ruling in this case remains under seal, but the court issued a one-page ruling denying FSOC’s request to dismiss the case, and a judgment in favor of MetLife.
Per a report in The Wall Street Journal, the decision of Judge Rosemary Collyer “helps strengthen mounting backlash” against the numerous post-financial crisis regulations.
CUNA’s Removing Barriers Blog explored both cases and their potential impact in greater detail in a recent entry.