REFILE-UPDATE 2-U.S. court rules CFPB structure unconstitutional, bureau can still operate

By Lisa Lambert and Nate Raymond

WASHINGTON/NEW YORK A federal appeals court ruled on Tuesday that the structure of the U.S. agency charged with guarding consumers’ finances is unconstitutional, fueling an election-year political fight over one of the signature government responses to the 2007-09 financial crisis.

The U.S. Court of Appeals for the District of Columbia Circuit threw out a $109 million penalty against PHH Corp in 2014, saying the structure of the Consumer Financial Protection Bureau gives its sole director too much power.

The three-judge panel, though, also sought to remedy the problem by giving the president the power to fire the director, which it said made the position similar to the Attorney General and other constitutionally sanctioned agency heads who answer to the White House.

“The CFPB has dodged the biggest…

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