Category: finance

Congress Attempts to Counsel Trump Concerning Removal of CFPB Director Cordray, While PHH Petition for Rehearing Remains Undecided

Congress Capitol CFPB Director CordrayToday, Senators Chuck Schumer (D-NY), Sherrod Brown (D-OH), Elizabeth Warren (D-MA) and others voiced their opposition to any attempt by President-elect Donald Trump to oust Richard Cordray, the current Director of the Consumer Financial Protection Bureau (“CFPB”), before Cordray’s term ends in July 2018. They also sent a letter to Cordray outlining and praising his accomplishments as CFPB Director.

The Senators’ opposition to the prospect of Cordray’s removal is just the latest volley between members of Congress and the incoming Administration concerning the CFPB’s directorship.

On January 12, Sean Spicer, a senior spokesperson for President-elect Trump, told reporters that the President-elect had interviewed former Representative Randy Neugebauer (R-TX) for the position of Director of the CFPB. With Richard Cordray’s term as CFPB Director not scheduled to conclude until July 2018, this strongly suggested that the President-elect is considering an attempt to oust Cordray sooner. While in Congress, Rep. Neugebauer introduced legislation aiming to replace the CFPB’s single director with a five-member commission.

Spicer’s statement came on the heels of a January 10 statement from Senator Brown, the ranking member of the Senate Banking, Housing, and Urban Affairs Committee, urging the President-elect not to attempt to remove Cordray or abolish the CFPB. Senator Brown cautioned President-elect Trump that, “Under Richard Cordray’s leadership, the CFPB has returned $12 billion to servicemembers, seniors, and working Americans . . . Firing Cordray and abolishing the consumer bureau so the special interests can get their $12 billion back would shatter President-elect Trump’s promise to hold Wall Street accountable and protect working people.”

Also on January 10, minority members of the House Committee on Financial Services released a letter to President-elect Trump in the same vein, commending Director Cordray and counseling the President-elect against attempting to remove him.

On January 9, Senators Ben Sasse (R-NE) and Mike Lee (R-UT) released a letter to Vice President-elect Mike Pence urging the opposite: “Given the CFPB’s unconstitutional structure, removing Director Cordray would be consistent with President Trump’s oath to ‘preserve, protect, and defend the Constitution of the United States’ and his duty to serve as an independent guardian of the U.S. Constitution. Removing Director Cordray would also uphold the American idea of limited government, because Director Cordray has vigorously supported the unconstitutional independence of the CFPB and pursued a regulatory agenda that is harmful to the American people.”

The prospect of Director Cordray’s removal is top of mind following the D.C. Circuit Court’s decision in PHH Corp., et al. v. Consumer Financial Protection Bureau, which ruled unconstitutional the provision of the Dodd-Frank Act establishing that the CFPB Director could be fired only “for cause,” i.e., for inefficiency, neglect of duty, or malfeasance in office.

As discussed in a prior post, Senators Brown and Warren are among 21 current and former members of Congress who filed an amicus brief in support of the CFPB’s petition for rehearing en banc of the PHH decision. On December 22, PHH filed a response to the petition, arguing that there is no need for the D.C. Circuit to revisit its original decision. The United States also filed a response on December 22, arguing that the D.C. Circuit’s decision “departs from” Supreme Court jurisprudence regarding the separation-of-powers and the removal of executive agency heads. The court granted PHH until January 27 to respond to the United States’ brief. Any decision on the petition for rehearing will thus not be made until after President-elect Trump’s inauguration on January 20, raising the prospect that the United States’ brief could be withdrawn if the Department of Justice’s position changes under the incoming Administration.

ARTICLE BY Jamie A. Heine of Covington & Burling LLP

© 2017 Covington & Burling LLP

China Devalues the Yuan in Biggest Single-Day Markdown in 20 Years

The People’s Bank of China—the country’s central bank—devalued its notoriously tightly controlled currency (Chinese Renminbi) by 1.9 percent against the U.S. dollar between Monday night and Tuesday morning, Aug. 11, 2015. Such devaluation represents the greatest single-day markdown since 1994, following years of international political rhetoric concerning China’s exchange rate control.

Precisely because the Chinese government kept the yuan tied to a strong dollar, the exports of other countries have become more competitive as their currencies have fallen against the yuan over the past year. This has resulted in a weakening export sector, upon which the Chinese economy is very much dependent. Other contributing factors to the currency devaluation are the country’s slowing, albeit still net-positive, second-quarter GDP in comparison to prior years and, perhaps, a desire to reign in capital outflows from China, which totaled $162 billion for the first half of this year alone. Add to this backdrop the fact that the central bank has repeatedly cut interest rates to boost lending and spur a slowing economy over the past year, thereby also decreasing returns on domestic investments and forcing investors to look outwardly for higher yields.

While Beijing is focused on the country’s growth and macroeconomic prosperity, the move raises questions as to how a weaker yuan will affect the very active market of Chinese foreign investors.

However, the question now is how the devaluation of the yuan will impact foreign direct investment by Chinese in the real estate sector and as well in EB-5 investments.

ARTICLE BY Shaun K. Staller of Greenberg Traurig, LLP

©2015 Greenberg Traurig, LLP. All rights reserved.