On Tuesday, a Washington DC circuit court ruled that the structure of the CFPB as an independent agency was unconstitutional. The Court determined that the power of the Director of the CFPB (currently Richard Cordray) was not properly checked by the other branches of the government to avoid abuses of power and arbitrary decision-making.
The court criticized the structure of the CFPB as an unprecedented concentration of unilateral power in the Director, noting that this was the first time in history that so much executive power was granted to any individual, other than the President. The ruling that it was unconstitutional; however, does not signify the collapse of the agency nor does it invalidate any of the agency actions up to this point.
As a remedy, the court recommended that the Director of the CFPB should be subject to the direction and control of the President of the United States. This effectively makes the CFPB an Executive Agency rather than an Independent Agency. According to the Court, placing the CFPB within the chain of command of the Executive Branch under the supervision and direction of the President is an appropriate control over the activities of the CFPB. This mean, in the short term, the ruling should not have a significant effect on the ongoing operations of the CFPB.