Vox, July 11, 2018: Consumer advocacy groups are extremely worried about Brett Kavanaugh
President Donald Trump’s Supreme Court pick has a history with the Consumer Financial Protection Bureau, the government’s consumer watchdog agency.
In 2016, Brett Kavanaugh, serving on the DC Circuit Court of Appeals, wrote an opiniondeclaring the agency a “gross departure from settled historical practice” and describing all independent executive agencies as a “headless fourth branch of the US government.”
Now, consumer advocates are worried about what Kavanaugh being on the Supreme Courtwould mean to the Consumer Financial Protection Bureau (CFPB), which the Trump administration has undermined — and about Kavanaugh’s attitude toward consumer protection more broadly.
The case Kavanaugh decided began in 2014, when the CFPB, under then-Director Richard Cordray, alleged that mortgage company PHH Corp. had harmed consumers through a mortgage insurance kickback scheme that started as early as 1995.
The bureau found that when PHH struck mortgage agreements, it referred its customers to mortgage insurers it had partnerships with. In exchange for those referrals, insurers bought reinsurance, a sort of insurance for insurers, from PHH’s subsidiaries, and PHH took those fees as kickbacks.
In 2015, the CFPB ordered PHH to pay $109 million in fines. PHH sued, seeking to vacate the CFPB’s order and arguing that its mere existence was unconstitutional.
Kavanaugh was part of a three-judge panel on the DC Circuit Court of Appeals that ruledlargely in favor of PHH in October 2016. Kavanaugh, who wrote the opinion, held that the CFPB’s leadership structure, although not the entire agency, is unconstitutional. He took issue with the agency’s setup: It’s under a single director who can only be fired by the president with cause.
