CFPB declares most agency rules still valid after high court decision

The Consumer Financial Protection Bureau on Tuesday sought to provide certainty that key regulatory actions taken in the past eight years are still valid despite a Supreme Court ruling that the agency's leadership structure is unconstitutional.

The bureau said it had "ratified" most policies, designating them as still in effect after the court's June decision.

CFPB Director Kathy Kraninger said the bureau is similarly considering whether to reaffirm other “legally significant” actions, including pending enforcement actions.

“The Bureau is taking action to ensure that consumers and market participants understand that the same rules continue to govern the consumer financial marketplace,” Kraninger said in a press release.

Bloomberg News

The Supreme Court ruled in June that the CFPB’s statutory structure, which requires a president to find cause before firing the agency's director, violates the separation of powers. The decision means a sitting CFPB director can be fired at will by the president. While some critics of the agency sought to have the court invalidate the agency and its past rule, the justices' ruling did not go that far.

The high court’s decision prompted Kraninger to ratify key actions to resolve any questions regarding what the Supreme Court called a potential “constitutional defect” with agency policies.

Yet the agency made certain exceptions, including the omission of policies that were already invalidated. For example, the CFPB did not ratify underwriting requirements included in the agency's 2017 payday rule. (The CFPB released a new regulation on Tuesday that rescinded those requirements.) And Kraninger did not ratify the 2017 arbitration rule that was repealed by Congress through the Congressional Review Act.

The CFPB said it is still considering whether ratifying “certain other legally significant actions by the Bureau, such as certain pending enforcement actions, are appropriate.”

The bureau said it will ratify pending enforcement actions on a case-by-case basis and that all past enforcement actions do not need to be ratified.

“The Bureau does not believe that it is necessary for this ratification to include various previous Bureau actions that have no legal consequences for the public, or enforcement actions that have been finally resolved,” the CFPB stated.