Many pundits and some Republican politicians crowed at the court’s decision to name the management of the bureau as "unconstitutional", and declared the ruling a significant blow against the agency.
The PHH case specifically dealt with the bureau’s authority to bring enforcement action over pre-crisis activities. Despite its recent loss in court, it still has the power to enforce against all unfair, deceptive, or abusive acts or practices (UDAAP) that have taken place after Dodd-Frank.
The ruling against the CFPB will, if upheld in an inevitable appeal, curtail its ability to bring enforcement action against historical abuses as it has done in the past.
The court also ruled that CFPB Director Richard Cordray could now be dismissed at the pleasure of the president rather than just for cause, as was the case before the ruling.
While there has been some quiet celebration in financial circles about the CFPB finally being taken down a peg, any predictions of the CFPB's impending demise should be taken with a hefty grain of salt.
The CFPB remains the most popular regulator within the Democratic Party and was handed a colossal public relations win after its recent enforcement action against Wells Fargo over the bank's fraudulent consumer banking activities.
In Congress, the CFPB and Cordray enjoy the support of most Democrats, and there is no indication that President Barack Obama has anything but the full support of the agency meant to be the buffer between US consumers and unscrupulous bankers.
Given that Obama is looking more and more likely to be replaced by Hillary Clinton in November’s election, a result that even many of Wall Street’s most ardent capitalists are privately supporting, the CFPB is likely to have a supporter in the Oval Office until January 2021 at least.
That is to say nothing of its main cheerleaders in the Senate, led by Elizabeth Warren, senator for Massachusetts, who may be in the majority come January if Donald Trump’s meltdown along the campaign trail leads to Republican losses down the ticket.
The CFPB will also almost certainly retain most, if not all, of the wide ranging powers that it was granted in the aftermath of Dodd-Frank, regardless of the ruling.
Only the beginning of the attacks on the bureau
While the CFPB continues to enjoy protection from the left, the ruling against it will likely mean attacks from the right will intensify.
Republicans in Congress have long railed against the CFPB and the ruling will embolden many of the party's leading opponents of financial regulation.
It is likely no one in the Republican Party will have been more delighted by the ruling than House Financial Services Committee chairman Jeb Hensarling, who has been consistent in his criticism of the CFPB since its inception.
“This is a good day for democracy, economic freedom, due process and the Constitution,” Hensarling said after the ruling. “The second highest court in the land has vindicated what House Republicans have said all along, that the CFPB’s structure is unconstitutional.”
The CFPB understandably did not see eye to eye with Hensarling, and noted that it “respectfully disagreed” with the court’s ruling.
Given that the House will likely remain in Republican hands even in the event of a Trump defeat, attacks on the bureau after the election could ramp up.
However, anyone looking to take on the CFPB will likely be battling a Democratic president until at least 2021 and could very well face a Democratic Senate.
In boxing terms, the bureau took a surprise knockdown after some early dominance in the post-crisis bout. But it will be quick to get back on its feet, and anyone hoping for a knockout blow will not only have to fight the most influential Washington regulator to emerge from Dodd-Frank, but also the intensely powerful supporters it has in its corner.
The CFPB may have been wounded by last week’s ruling but the regulator is far from defeated despite the headlines.