WASHINGTON—A federal judge in New York has ruled that the BCFP's leadership structure is unconstitutional, disagreeing with the U.S. Court of Appeals for the D.C. Circuit's decision in the PHH Corp. lawsuit that upheld the Bureau's current structure.
Senior U.S. District Judge Loretta Preska cited the D.C. Circuit's dissent in her ruling, which concluded that the Bureau "is unconstitutionally structured because it is an independent agency that exercises substantial executive power and is headed by a single director.”
The case was originally brought by the BCFP and New York Attorney General against RD Legal Funding. The parties involved have until July 9 to determine how they will proceed.
In the earlier case, PHH, which was first to challenge the constitutionality of the agency, decided not to appeal its case, and the Bureau officially dismissed its case against the company earlier this month.
Both credit union trade associations have been calling for a move to a five-person commission to oversee the BCFP, and recent legislation introduced by Reps. Dennis Ross (R-FL) and Kyrsten Sinema (D-AZ) seeks to do just that.
Current CFPB Acting Director Mick Mulvaney has also advocated for a commission-led Bureau.