After a U.S. Court of Appeals ruling in the Washington, D.C. circuit court on Tuesday, the future of the Consumers Financial Protection Bureau’s (CFPB) structure is in limbo. In a 2-1 ruling, the court found the CFPB’s structure to be unconstitutional due to its oversight by a single director.

Initially created in the wake of the 2008 financial crisis, the bureau is a government agency aimed at helping to reform the financial sector and protect the public from predatory and dangerous practices. The five-year agency, run by its Director Richard Cordray, had the power to administer, enforce and otherwise implement federal consumer financial laws without any oversight from the governmental branches.

“Because the CFPB is an independent agency headed by a single director and not by a multi-member commission, the director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. Government,” the ourt decision said.

Although the court ruled the bureau to be unconstitutional, the court ruled that the CFPB could continue functioning, but must restructure itself to operate as a regular executive agency for the time being – thus giving the President of the United States the power to supervise and remove the director for any reason.

If you have any questions on how this might impact your institution, please contact one of our Financial Institution Group specialists.