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Appeals Court to Review Constitutionality of CFPB's Structure

A federal appellate court announced Thursday that it would review a decision finding that the structure of the Consumer Financial Protection Bureau is unconstitutional, temporarily undoing an earlier decision that said the president is allowed to fire the agency's director at will, the <em>Washington Examiner</em> reported yesterday. The U.S. Court of Appeals for District of Columbia Circuit said that the full court would rehear the case, <em>PHH Corporation, et al v. CFPB</em>, which has major implications for the future of consumer financial regulation under the administration of President Trump. In October, a three-judge panel had ruled that the bureau's single-director set-up was unconstitutional. The bureau's current director, Richard Cordray, is an Obama appointee who has advanced regulations opposed by Republicans. GOP members of Congress have called on Trump to fire and replace Cordray, as Trump could do at will if the previous ruling holds up. Oral hearings before the full court are set for May 24.

Consumer Agency Can Demand Answers About Foreclosed Homes, Judge Rules

Judge Nancy G. Edmunds of Federal District Court in Detroit has ruled that one of the nation’s largest providers of seller-financed homes must comply with a demand for documents and other information from the Consumer Financial Protection Bureau (CFPB), the <em>New York Times</em> reported today. The CFPB has been looking into whether the terms of some of these sales violated federal truth-in-lending laws. The agency filed a lawsuit in November after one such provider, Harbour Portfolio Advisors of Dallas, refused to comply with an administrative subpoena. Harbour Portfolio had argued that the agency had no authority to investigate its sale of formerly foreclosed homes to poor people through high-interest installment payment contracts — often referred to as contracts for deed.

U.S. Household Debts Climbed in 2016 by Most in a Decade

The total amount of debt held by American households climbed in 2016 by the most in a decade, driven by broad and steady increases in credit card debt, auto and student loans, and a fourth-quarter surge to the highest amount of mortgage originations since before the financial crisis, the Wall Street Journal reported today. Total household debt climbed by $226 billion in the final three months of 2016, according to a report yesterday from the Federal Reserve Bank of New York. Total household debts are now just $99 billion shy of the all-time peak of $12.7 trillion set in the third quarter of 2008 just as the banking system began crashing down. The New York Fed estimates that debt is highly likely to set a new record in 2017. The New York Fed doesn’t adjust its figures for inflation. When measured against the broader economy, total household borrowing today is 67 percent of nominal gross domestic product, compared with about 85 percent in 2008.

U.S. Court to Rehear Challenge to SEC Judges

A U.S. appeals court said yesterday that it would rehear a challenge to the Securities and Exchange Commission's use of in-house judges, Reuters reported. The order issued by the U.S. Court of Appeals for the District of Columbia Circuit wiped out a three-judge panel's August decision in favor of the commission. The court indicated that 10 of the court's judges will hear the case. Oral arguments will be held on May 24. Former radio host Raymond Lucia brought the challenge, arguing that the agency's administrative law judges were unconstitutionally appointed. Lucia, known for his "Buckets of Money" investment strategy, was hoping to beat back fraud charges. The SEC has in recent years has come under attack by defendants who have questioned the fairness of its in-house trials. In December, a federal appeals court in Denver ruled that the appointments process was unconstitutional, raising the prospect of the question ultimately being decided by the Supreme Court.

Sunrise Brands Bids for Bankrupt U.S. Retailer The Limited

Clothing firm Sunrise Brands LLC has bid for the e-commerce business and intellectual property of bankrupt U.S. retailer The Limited, challenging a $26.3 million offer from private equity firm Sycamore Partners, Reuters reported today. Sunrise Brands' bid underscores the value it sees in The Limited's online presence and intellectual property, even as the specialty retailer was forced to close its roughly 250 brick-and-mortar stores earlier this year. It filed for bankruptcy last month, with Sycamore Partners as a stalking-horse bidder. The bankruptcy auction for The Limited is scheduled for Feb. 21 in Philadelphia. While the value of Sunrise Brands' offer could not be learned, the bankruptcy court required bids topping the one from Sycamore to start at $26.5 million. 

HHGregg Said to Hire Advisers to Help Cope With Retail Woes

HHGregg Inc. is turning to investment banks including Miller Buckfire & Co. for help as the electronics and furniture retailer battles weak sales, Bloomberg News reported yesterday. The retailer also retained Miller Buckfire’s parent Stifel Financial Corp. to explore a range of strategic transactions. Morgan Lewis & Bockius LLP is hired as legal adviser, according to the report. Miller Buckfire will advise the company on plans including how to deal with its debt and a possible turnaround. The retailer posted disappointing numbers for the crucial holiday season in the quarter ended Dec. 31, with sales plunging 24 percent to about $453 million from the year earlier.