Federal appeals court rules in favor of consumer watchdog group

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The Trump administration suffered a defeat this week in its efforts to get rid of a consumer watchdog agency it says has too much power.

When Wells Fargo set up thousands of phantom accounts without their customers’ knowledge, the Consumer Financial Protection Bureau stepped in and imposed a $100 million fine on the bank.

The CFPB also secured billions of dollars of relief for credit card customers of banks including Citi Bank, Bank of America and JP Morgan Chase.

Some Republicans have complained that Congress has too much power in the hands of the CFPB and its director Richard Cordray.

“The CFPB is unlike any other federal agency,” said Sen. Mike Crapo. “Since its creation, we have argued that far too much power is invested in the CFPB director without any effective checks and balances.”

But a federal appeals court ruled in favor of the CFPB and ruled that the president cannot fire the agency’s director at will.

“I think the opinion is on fairly solid ground,” says Rutgers Law School Dean Ron Chen. “We have lots of independent agencies that have independence from the president.”

Chen says that the ruling doesn’t give the CFPB complete autonomy. The president still gets to pick the director of the agency.

In fact, this week President Donald Trump’s hand-picked acting director for the CFPB, Mick Mulveney, took away power from the agency’s Office of Fair Lending and Equal Opportunity. That office had been responsible for investigating financial firms that discriminated against minorities. It will now be responsible for educating consumers instead.

The final decision of the CFPB’s independence isn’t over just yet. Chen says that he expects the case to be heard by the U.S. Supreme Court.

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