NEW ORLEANS—The Federal Housing Finance Agency (FHFA) "is unconstitutionally structured and violates the separation of powers,” according to a ruling by the Fifth Circuit Court of Appeals.
The ruling relied heavily on similar arguments that were made in the lawsuit filed against the Bureau of Consumer Financial Protection by PHH Corp. in which the court similarly ruled.
Specifically, the Fifth Circuit cited D.C. Circuit Court of Appeals Judge – and now Supreme Court justice nominee – Brett Kavanaugh's dissent in the en banc decision that upheld the Bureau's single-director structure.
In addition to the FHFA structure challenge, the Fifth Circuit has agreed to hear a challenge to the Bureau's constitutionality brought by defendants accused by the Bureau in 2016 of engaging in unfair payday lending conduct; a federal judge in New York also recently ruled the bureau's structure unconstitutional. The Supreme Court could eventually take up the single-director constitutionality issue to settle lower court differences, noted NAFCU in its analysis.
Both credit union trade groups have called for the single director at each agency to be replaced by a board or commission.