Disagreed With by Consumer Financial Protection Bureau v ... · Trade Commission, a consumer-protection financial regulator with powers analogous to those of the CFPB. Humphrey's

PHH Corporation v. Consumer Financial Protection Bureau, 881 F.3d 75 (2018)434 U.S.App.D.C. 98, Fed. Sec. L. Rep. P 100,012

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

KeyCite Yellow Flag - Negative Treatment Disagreed With by Consumer Financial Protection Bureau v. RD Legal

Funding, LLC, S.D.N.Y., June 21, 2018

881 F.3d 75United States Court of Appeals,

District of Columbia Circuit.

PHH CORPORATION, et al., Petitionersv.

CONSUMER FINANCIALPROTECTION BUREAU, Respondent

No. 15-1177|

Argued May 24, 2017|

Decided January 31, 2018

SynopsisBackground: Mortgage lender and its captive reinsurer filedpetition challenging Consumer Financial Protection Bureau's(CFPB) determination that their tying arrangement violatedReal Estate Settlement Procedures Act (RESPA). The Court

of Appeals, 839 F.3d 1, vacated and remanded. Petition forrehearing en banc was granted.

[Holding:] The Court of Appeals, Pillard, Circuit Judge, heldthat statute providing that CFPB's director could be removedby President only for cause was constitutional.

Petition granted in part and denied in part, and case remandedto agency.

Tatel, Circuit Judge, with whom Circuit Judges Millett andPillard joined, concurred and filed opinion.

Wilkins, Circuit Judge, with whom Rogers, Circuit Judge,joined, concurred and filed opinion.

Griffith, Circuit Judge, concurred in judgment and filedopinion.

Karen Lecraft Henderson, Circuit Judge, dissented and filedopinion.

Kavanaugh, Circuit Judge, with whom Senior Circuit JudgeRandolph joined, dissented and filed opinion.

Randolph, Senior Circuit Judge, dissented and filed opinion.

Procedural Posture(s): Review of Administrative Decision.

West Headnotes (1)

[1] Public EmploymentAuthority to impose adverse action;

manner and mode of imposition

United StatesLegislative Authority, Powers, and

Functions

United StatesTake Care Clause

United StatesIn general; power to remove

Provision of Dodd-Frank Wall Street Reform andConsumer Protection Act providing ConsumerFinancial Protection Bureau's (CFPB) directorwith five-year term in office, subject to removalby President only for “inefficiency, neglect ofduty, or malfeasance in office,” was consistentwith President's constitutional authority underArticle II to “take Care that the Laws befaithfully executed,” and valid exercise ofCongress's Article I legislative power, eventhough CFPB had independent funding source,was led by single director, and had broadregulatory authority over consumer finance; for-cause protection left President ample tools toensure faithful execution of laws, and functionsof CFPB and its director were not core executive

functions. U.S. Const. art. 2, § 3; 12 U.S.C.A.§ 5491(c)(3).

12 Cases that cite this headnote

On Petition for Rehearing En Banc.

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Attorneys and Law Firms

Theodore B. Olson, Washington, argued the cause forpetitioners. With him on the briefs were Helgi C. Walker,Lucas C. Townsend, Mitchel H. Kider, David M. Souders,Thomas M. Hefferon, and William M. Jay, Washington.

Andrew J. Pincus, Stephen C.N. Lilley, Matthew A. Waring,Kate Comerford Todd, and Steven P. Lehotsky, Washington,were on the brief for amicus curiae The Chamber ofCommerce of the United States of America in support ofpetitioners.

David K. Willingham, Michael D. Roth, Los Angeles, JeffreyM. Hammer, and Kelly L. Perigoe were on the brief for amicicuriae RD Legal Funding, LLC, et al. in support of petitioners.

Joseph R. Palmore and Bryan J. Leitch, Washington, were onthe brief for amici curiae American Bankers Association, etal. in support of petitioners and vacatur.

David T. Case, Washington, and Phillip L. Schulman wereon the brief for amicus curiae The National Association ofRealtors® in support of petitioners and reversal of the June4, 2015 order of the Director of the Consumer FinancialProtection Bureau.

Jay N. Varon and Jennifer M. Keas, Washington, were on thebrief for amici curiae American Land Title Association, et al.in support of petitioners.

Joshua D. Hawley, Attorney General, Office of the AttorneyGeneral for the State of Missouri, and D. John Sauer, StateSolicitor, were on the brief for amici curiae the States ofMissouri, et al. in support of petitioners.

Kirk D. Jensen, Joseph M. Kolar, and Alexander S.Leonhardt, Washington, were on the brief for amicus curiaeThe Consumer Mortgage Coalition in support of petitioner.

Marc J. Gottridge, New York, Allison M. Wuertz, IlyaShapiro, and Thaya Brook Knight were on the brief for amicuscuriae The Cato Institute in support of petitioners.

Brian Melendez, Minneapolis, was on the brief for amicuscuriae ACA International in support of petitioners.

C. Boyden Gray, Adam R.F. Gustafson, James R. Conde,Gregory Jacob, Sam Kazman, and Hans Bader, Washington,were on the brief for amici curiae State National Bank of BigSpring, et al. in support of petitioners.

Hashim M. Mooppan, Attorney, U.S. Department of Justice,argued the cause as amicus curiae United States of America.On the brief were Douglas N. Letter, Mark B. Stern, DanielTenny, and Tara S. Morrissey, Attorneys. Ian H. Gershengorn,Attorney, Washington, entered an appearance.

Lawrence DeMille-Wagman, Senior Litigation Counsel,Consumer Financial Protection Bureau, argued the cause forrespondent. With him on the brief was John R. Coleman,Deputy General Counsel.

George Jepsen, Attorney General, Office of the AttorneyGeneral for the State of Connecticut, and John Langmaid,Assistant Attorney General, were on the brief for The Statesof Connecticut, et al. in support of respondent.

Thomas C. Goldstein, Eric Citron, Tejinder Singh, andDeepak Gupta, Washington, were on the brief for amicicuriae Americans For Financial Reform, et al. in support ofrespondent.

Elizabeth B. Wydra, Washington,Brianne J. Gorod, andSimon Lazarus were on the brief for amici curiae Current andFormer Members of Congress in support of respondent.

Scott L. Nelson and Allison M. Zieve, Washington, were onthe brief for amici curiae Public Citizen, Inc., et al. in supportof respondent.

Julie Nepveu, Washington, was on the brief for amici curiaeAARP and AARP Foundation in support of respondent.

Deepak Gupta, Washington, was on the brief for amici curiaeFinancial Regulation Scholars in support of respondent.

Katharine M. Mapes, Jessica R. Bell, and Jeffrey M. Bayne,Washington, were on the brief for amici curiae Separation ofPowers Scholars in support of Consumer Financial ProtectionBureau.

Before: Garland * , Chief Judge, Henderson, Rogers, Tatel,

Brown ** , Griffith, Kavanaugh, Srinivasan, Millett, Pillard,Wilkins, and Katsas*, Circuit Judges and Randolph, SeniorCircuit Judge.

Opinion

Concurring opinion filed by Circuit Judge Tatel, with whomCircuit Judges Millett and Pillard join.

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Concurring opinion filed by Circuit Judge Wilkins, withwhom Circuit Judge Rogers joins.

Opinion concurring in the judgment filed by Circuit JudgeGriffith.

Dissenting opinion filed by Circuit Judge Henderson.

Dissenting opinion filed by Circuit Judge Kavanaugh, withwhom Senior Circuit Judge Randolph joins.

Dissenting opinion filed by Senior Circuit Judge Randolph.

Pillard, Circuit Judge:

*76 *77 **100 We granted en banc review to considerwhether the federal statute providing the Director of theConsumer Financial Protection Bureau (CFPB) with a five-year term in office, subject to removal by the President onlyfor “inefficiency, neglect of duty, or malfeasance in office,”

12 U.S.C. § 5491(c)(3), is consistent with Article II ofthe Constitution, which vests executive power “in a Presidentof the United States of America” charged to “take Care thatthe Laws be faithfully executed,” U.S. Const. art. II, § 1,cl. 1; id. § 3. Congress established the independent CFPBto curb fraud and promote transparency in consumer loans,home mortgages, personal credit cards, and retail banking.

See 12 U.S.C. § 5481(12). The Supreme Court eighty yearsago sustained the constitutionality of the independent FederalTrade Commission, a consumer-protection financial regulator

with powers analogous to those of the CFPB. Humphrey'sExecutor v. United States, 295 U.S. 602, 55 S.Ct. 869, 79L.Ed. 1611 (1935). In doing so, the Court approved the verymeans of independence Congress used here: protection ofagency leadership from at-will removal by the President.The Court has since reaffirmed and built on that precedent,and Congress has embraced and relied on it in designingindependent agencies. We follow that precedent here to holdthat the parallel provision of the Dodd-Frank Wall StreetReform and Consumer Protection Act shielding the Directorof the CFPB from removal without cause is consistent withArticle II.

Introduction

The 2008 financial crisis destabilized the economy and leftmillions of Americans economically devastated. Congressstudied the causes of the recession to craft solutions; it

determined that the financial services industry had pushedconsumers into unsustainable forms of debt and that federalregulators had failed to prevent mounting risks to theeconomy, in part because those regulators were overlyresponsive to the industry they purported to police. Congresssaw a need for an agency to help restore public confidence inmarkets: a regulator attentive to individuals and families. Soit established the Consumer Financial Protection Bureau.

Congress's solution was not so much to write new consumerprotection laws, but to collect under one roof existing statutesand *78 **101 regulations and to give them a chance towork. Congress determined that, to prevent problems that hadhandicapped past regulators, the new agency needed a degreeof independence. Congress gave the CFPB a single Directorprotected against removal by the President without cause.That design choice is challenged here as an unconstitutionalimpediment to the President's power.

To analyze the constitutionality of the CFPB's independence,we ask two questions:

First, is the means of independence permissible? TheSupreme Court has long recognized that, as deployed toshield certain agencies, a degree of independence is fullyconsonant with the Constitution. The means of independencethat Congress chose here is wholly ordinary: The Directormay be fired only for “inefficiency, neglect of duty, or

malfeasance in office,” 12 U.S.C. § 5491(c)(3)—the verysame language the Supreme Court approved for the Federal

Trade Commission (FTC) back in 1935. Humphrey's

Executor, 295 U.S. at 619, 629-32, 55 S.Ct. 869; see 15U.S.C. § 41. The CFPB's for-cause removal requirementthus leaves the President no less removal authority than

the provision sustained in Humphrey's Executor; neitherPHH nor dissenters disagree. The mild constraint on removalof the CFPB Director contrasts with the cumbersome orencroaching removal restrictions that the Supreme Courthas invalidated as depriving the President of his Article IIauthority or otherwise upsetting the separation of powers.

In Free Enterprise Fund v. Public Company AccountingOversight Board, 561 U.S. 477, 130 S.Ct. 3138, 177 L.Ed.2d706 (2010), the Court left in place ordinary for-causeprotection at the Securities and Exchange Commission (SEC)—the same protection that shields the FTC, the CFPB,and other independent agencies—even as it invalidated anunusually restrictive second layer of for-cause protection

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of the SEC's Public Company Accounting Oversight Board(PCAOB) as an interference with Article II. In its onlyother decisions invalidating removal restrictions, the SupremeCourt disapproved of means of independence not at issuehere, specifically, Congress's assigning removal power toitself by requiring the advice and consent of the Senate in

Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, 71 L.Ed.

160 (1926), and a joint resolution of Congress in Bowsherv. Synar, 478 U.S. 714, 106 S.Ct. 3181, 92 L.Ed.2d 583(1986). The Supreme Court has never struck down a statuteconferring the standard for-cause protection at issue here.

Second, does “the nature of the function that Congressvested in” the agency call for that means of independence?

Wiener v. United States, 357 U.S. 349, 353, 78 S.Ct.

1275, 2 L.Ed.2d 1377 (1958); see also Morrison v. Olson,487 U.S. 654, 687, 691 n.30, 108 S.Ct. 2597, 101 L.Ed.2d569 (1988). The CFPB is a financial regulator that appliesa set of preexisting statutes to financial services marketed“primarily for personal, family, or household purposes.”

12 U.S.C. § 5481(5)(A); see also id. §§ 5481(4),

(6), (15). Congress has historically given a modicumof independence to financial regulators like the FederalReserve, the FTC, and the Office of the Comptroller of theCurrency. That independence shields the nation's economyfrom manipulation or self-dealing by political incumbents andenables such agencies to pursue the general public interestin the nation's longer-term economic stability and success,even where doing so might require action that is politically

unpopular in the short term. In Humphrey's Executor, theSupreme Court unanimously sustained the requirement ofcause to remove members of the FTC, a consumer protectionagency with a broad mandate to prevent *79 **102 unfairmethods of competition in commerce. The FTC, “chargedwith the enforcement of no policy except the policy of the

law,” Humphrey's Executor, 295 U.S. at 624, 55 S.Ct. 869,could be independent consistent with the President's duty totake care that the law be faithfully executed. The CFPB'sfocus on the transparency and fairness of financial productsgeared toward individuals and families falls squarely withinthe types of functions granted independence in precedentand history. Neither PHH nor our dissenting colleagues havesuggested otherwise.

The ultimate purpose of our constitutional inquiry is todetermine whether the means of independence, as deployed at

the agency in question, impedes the President's ability underArticle II of the Constitution to “take Care that the Lawsbe faithfully executed.” U.S. Const. art. II, § 3. It is beyondquestion that “there are some ‘purely executive’ officials whomust be removable by the President at will if he is to be

able to accomplish his constitutional role.” Morrison, 487U.S. at 690, 108 S.Ct. 2597. Nobody would suggest thatCongress could make the Secretary of Defense or Secretaryof State, for example, removable only for cause. At the sametime, the Court has consistently affirmed the constitutionalityof statutes “conferring good-cause tenure on the principal

officers of certain independent agencies.” Free EnterpriseFund, 561 U.S. at 493, 130 S.Ct. 3138.

The Supreme Court has distinguished those removalrestrictions that are compatible with the President'sconstitutionally assigned role from those that run afoul ofArticle II in the line of removal-power cases running from

Myers, 272 U.S. 52, 47 S.Ct. 21, 71 L.Ed. 160, through

Humphrey's Executor, 295 U.S. 602, 55 S.Ct. 869, 79

L.Ed. 1611, Wiener, 357 U.S. 349, 78 S.Ct. 1275, 2

L.Ed.2d 1377, Bowsher, 478 U.S. 714, 106 S.Ct. 3181,

92 L.Ed.2d 583, Morrison, 487 U.S. 654, 108 S.Ct.

2597, 101 L.Ed.2d 569, and Free Enterprise Fund, 561U.S. 477, 130 S.Ct. 3138, 177 L.Ed.2d 706. The Court hasrepeatedly held that “a ‘good cause’ removal standard” doesnot impermissibly burden the President's Article II powers,where “a degree of independence from the Executive ...is necessary to the proper functioning of the agency or

official.” Morrison, 487 U.S. at 691 n.30, 686-96, 108

S.Ct. 2597; see Wiener, 357 U.S. at 356, 78 S.Ct. 1275;

Humphrey's Executor, 295 U.S. at 631, 55 S.Ct. 869.Armed with the power to terminate such an “independent”official for cause, the President retains “ample authority toassure” that the official “is competently performing his or her

statutory responsibilities.” Morrison, 487 U.S. at 692, 108S.Ct. 2597.

Petitioners in this case, PHH Corporation, PHHMortgage Corporation, PHH Home Loans, LLC, AtriumInsurance Corporation, and Atrium Reinsurance Corporation(collectively, PHH), would have us cabin the Court's

acceptance of removal restrictions by casting Humphrey'sExecutor as a narrow exception to a general prohibition on

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any removal restriction—an exception it views as permittingthe multi-member FTC but not the sole-headed CFPB.The distinction is constitutionally required, PHH contends,because “multi-member commissions contain their owninternal checks to avoid arbitrary decisionmaking.” Pet'rs' Br.23.

PHH's challenge is not narrow. It claims that independentagencies with a single leader are constitutionally defectivewhile purporting to spare multi-member ones. But theconstitutional distinction PHH proposes between theCFPB's leadership structure and that of multi-memberindependent agencies is untenable. That distinction findsno footing in precedent, historical *80 **103 practice,constitutional principle, or the logic of presidentialremoval power. The relevance of “internal checks” asa substitute for at-will removal by the President is nopart of the removal-power doctrine, which focuses onexecutive control and accountability to the public, notthe competing virtues of various internal agency designchoices. Congress and the President have historicallycountenanced sole-headed financial regulatory bodies. Andthe Supreme Court has upheld Congress's assignmentof even unmistakably executive responsibilities—criminalinvestigation and prosecution—to a sole officer protected

from removal at the President's will. Morrison, 487 U.S.at 686-96, 108 S.Ct. 2597.

Wide margins separate the validity of an independent CFPBfrom any unconstitutional effort to attenuate presidentialcontrol over core executive functions. The threat PHH'schallenge poses to the established validity of otherindependent agencies, meanwhile, is very real. PHH seeksno mere course correction; its theory, uncabined by anyprincipled distinction between this case and SupremeCourt precedent sustaining independent agencies, leadsmuch further afield. Ultimately, PHH makes no secretof its wholesale attack on independent agencies—whethercollectively or individually led—that, if accepted, wouldbroadly transform modern government.

Because we see no constitutional defect in Congress's choiceto bestow on the CFPB Director protection against removalexcept for “inefficiency, neglect of duty, or malfeasance inoffice,” we sustain it.

Background

The 2008 financial crisis cost millions of Americans theirjobs, savings, and homes. The federal commission thatCongress and the President chartered to investigate therecession found that, by 2011, “[a]bout four million familieshave lost their homes to foreclosure and another four anda half million have slipped into the foreclosure process orare seriously behind on their mortgage payments.” FinancialCrisis Inquiry Commission, The Financial Crisis InquiryReport, at xv (2011). All told, “[n]early $11 trillion inhousehold wealth has vanished, with retirement accountsand life savings swept away.” Id. In Congress's view, the2008 crash represented a failure of consumer protection.The housing bubble “was precipitated by the proliferation ofpoorly underwritten mortgages with abusive terms,” issued“with little or no regard for a borrower's understanding ofthe terms of, or their ability to repay, the loans.” S. Rep.No. 111-176, at 11-12 (2010). Federal bank regulators hadgiven short shrift to consumer protection as they focused(unsuccessfully) on the “safety and soundness” of thefinancial system and, post-crisis, on the survival of the biggestfinancial firms. Id. at 10. Congress concluded that this “failureby the prudential regulators to give sufficient considerationto consumer protection ... helped bring the financial systemdown.” Id. at 166.

Congress responded to the crisis by including in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L. 111-203, 124 Stat. 1376 (July 21, 2010), a new regulator:the Consumer Financial Protection Bureau. Congress gavethe new agency a focused mandate to improve transparencyand competitiveness in the market for consumer financialproducts, consolidating authorities to protect householdfinance that had been previously scattered among separateagencies in order to end the “fragmentation of the currentsystem” and “thereby ensur[e] accountability.” S. Rep. No.111-176, at 11.

The CFPB administers eighteen preexisting, familiarconsumer-protection laws previously overseen by the FederalReserve *81 **104 and six other federal agencies, virtuallyall of which were also independent. These laws seek tocurb fraud and deceit and to promote transparency and bestpractices in consumer loans, home mortgages, personal credit

cards, and retail banking. See 12 U.S.C. § 5481(12).The CFPB is charged “to implement and, where applicable,enforce Federal consumer financial law consistently for thepurpose of ensuring that all consumers have access to marketsfor consumer financial products and services” that “are fair,transparent, and competitive.” Id. § 5511(a). Additionally,

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the CFPB has authority to prohibit any “unfair, deceptive,or abusive act or practice under Federal law in connectionwith any transaction with a consumer for a consumer financialproduct or service, or the offering of a consumer financialproduct or service.” Id. § 5531(a).

To lead this new agency, Congress provided for a singleDirector to be appointed by the President and confirmedby the Senate. Id. §§ 5491(b)(1)-(2). Congress designed anagency with a single Director, rather than a multi-memberbody, to imbue the agency with the requisite initiative anddecisiveness to do the job of monitoring and restrainingabusive or excessively risky practices in the fast-changingworld of consumer finance. See, e.g., S. Rep. No. 111-176, at11. A single Director would also help the new agency becomeoperational promptly, as it might have taken many years toconfirm a full quorum of a multi-member body. See 155 Cong.Rec. 30,826-27 (Dec. 9, 2009) (statement of Rep. Waxman)(noting that a single director “can take early leadership inestablishing the agency and getting it off the ground”).

The Director serves a five-year term, with the potential of

a holdover period pending confirmation of a successor. 1

12 U.S.C. §§ 5491(c)(1)-(2). The President may removethe Director “for inefficiency, neglect of duty, or malfeasance

in office,” i.e., for cause. Id. § 5491(c)(3). By providing theDirector with a fixed term and for-cause protection, Congresssought to promote stability and confidence in the country'sfinancial system.

Congress also determined “that the assurance of adequatefunding, independent of the Congressional appropriationsprocess, is absolutely essential to the independent operationsof any financial regulator.” S. Rep. No. 111-176, at163. Congress has provided similar independence to otherfinancial regulators, like the Federal Reserve, the FederalDeposit Insurance Corporation, the Office of the Comptrollerof the Currency, the National Credit Union Administration,and the Federal Housing Finance Agency, which all havecomplete, uncapped budgetary autonomy. See infra Part I.C.2.Congress authorized the CFPB to draw from a statutorilycapped pool of funds in the Federal Reserve System ratherthan to charge industry fees or seek annual appropriationsfrom Congress as do some other regulators. The FederalReserve is required to transfer “the amount determined by theDirector [of the CFPB] to be reasonably necessary to carryout the authorities of the Bureau,” up to twelve percent of

the Federal Reserve's total operating expenses. 12 U.S.C.

§§ 5497(a)(1)-(2). If the Bureau requires funds beyond thatcapped allotment, it must seek them through congressional

appropriation. Id. § 5497(e).

*82 **105 The Real Estate Settlement Procedures Act of1974 (RESPA) is one of the eighteen preexisting statutes theCFPB now administers. See 12 U.S.C. §§ 2601-2617. RESPAaims at, among other things, “the elimination of kickbacksor referral fees that tend to increase unnecessarily the costsof certain [real estate] settlement services.” Id. § 2601(b)(2). To that end, RESPA's Section 8(a) prohibits giving oraccepting “any fee, kickback, or thing of value pursuant toany agreement or understanding” to refer business involving a“real estate settlement service.” Id. § 2607(a). The term “thingof value” is “broadly defined” and includes “the opportunityto participate in a money-making program.” 12 C.F.R. §1024.14(d). Another provision of RESPA, Section 8(c)(2),states that “[n]othing in this section shall be construed asprohibiting ... the payment to any person of a bona fide salaryor compensation or other payment for goods or facilitiesactually furnished or for services actually performed.” 12U.S.C. § 2607(c).

In this case, the CFPB Director interpreted those provisionsof RESPA as applied to PHH's mortgage insurance andreinsurance transactions. Mortgage insurance protects lendersin the event a borrower defaults on a mortgage loan. Mortgagelenders often require riskier borrowers to purchase suchinsurance as a condition of approving a loan. See Director'sDecision at 3. In turn, insurers may obtain reinsurance,transferring to the reinsurer some of their risk of loss inexchange for a portion of the borrower's monthly insurancepremiums. Borrowers do not ordinarily shop for mortgageinsurance, let alone reinsurance; rather, they are referred toinsurers of the lender's choosing, to whom they then paymonthly premiums. See id. During the period at issue, theonly mortgage reinsurers in the market were “captive”—that is, they existed to reinsure loans originated by themortgage lenders that owned them. See id. at 13. In a captivereinsurance arrangement, a mortgage lender refers borrowersto a mortgage insurer, which then pays a kickback to thelender by using the lender's captive reinsurer.

On January 29, 2014, the CFPB filed a Notice of Chargesagainst PHH, a large mortgage lender, and its captivereinsurer, Atrium. The CFPB alleged that “[t]he premiumsceded by [mortgage insurers] to PHH through Atrium: (a)were not for services actually furnished or performed, or (b)grossly exceeded the value of any such services,” and that

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the premiums were instead “made in consideration of PHH'scontinued referral of mortgage insurance business.” Notice ofCharges at 17-18.

The CFPB borrowed an administrative law judge (ALJ) fromthe Securities and Exchange Commission (SEC) to adjudicatethe charges. The ALJ issued a Recommended Decisionconcluding that PHH and Atrium violated RESPA becausethey had not demonstrated that the reinsurance premiumsAtrium collected from insurers were reasonably related tothe value of its reinsurance services. The ALJ recommendedthat the Director order disgorgement of about $6.4 million.Director's Decision at 9.

On review of the ALJ's recommendation, the CFPB Directorread RESPA to support a broader finding of misconductand a substantially larger remedy. The Director held that apayment is “bona fide” and thus permitted under Section8(c)(2) only if it is “solely for the service actually beingprovided on its own merits,” and not “tied in any way to areferral of business.” Director's Decision at 17. Thus, evenif the reinsurance premiums had been reasonably relatedto the value of the reinsurance *83 **106 services thatAtrium provided, PHH and Atrium could still be liableunder the Director's reading of RESPA insofar as theirtying arrangement funneled valuable business to Atriumthat it would not have garnered through open competition.The Director also held that RESPA's three-year statute oflimitations does not apply to the agency's administrativeenforcement proceedings (only to “actions” in court) and thatRESPA violations accrue not at the moment a loan closeswith a tying arrangement in place, but each time monthlypremiums are paid out pursuant to such a loan agreement.Id. at 11, 22. Those interpretations raised the disgorgementamount to more than $109 million.

This court stayed the Director's order pending review. InOctober 2016, a three-judge panel vacated the Director's

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Disagreed With by Consumer Financial Protection Bureau v ... · Trade Commission, a consumer-protection financial regulator with powers analogous to those of the CFPB. Humphrey's