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The CFPB isn’t getting any love from the DOJ in lawsuit with PHH

(NEWS) The CFPB is getting sued and the DOJ has decided they won’t be helping the consumer watchdog agency win.

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CFPB vs DOJ

The Department of Justice (DOJ) on Friday filed their long awaited brief in the Consumer Finance Protection Bureau (CFPB) vs PHH Corporation case. The motion pits the DOJ against the consumer watchdog agency.

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What beef could the DOJ possible have with an agency dedicated to protecting consumers? The debate all comes down to the CFPB’s unique structure, which the DOJ argues is unconstitutional.

Sovereign or nah?

“The Department of Justice argues that an independent agency with one sole individual at its head who can only be removed for cause is unconstitutional—and the exception permitted by the Supreme Court for independent agencies with a commission form of governance should not be extended to agencies with only one agency head,” explains Joseph Lynyak III, a partner at Dorsey & Whitney International Law Firm and one of the nation’s leading experts when it comes to the CFPB.

Essentially, the DOJ is arguing against the CFPB’s sovereignty.

According to the DOJ, the executive branch can’t effectively check the CFPB’s powers due to a “for cause” removal provision. This provision, only allows the CFPB’s director to be removed for “inefficiency, neglect of duty or malfeasance of office.”

The “for cause” clause

This “for cause” provision has been a major source of contention for the CFPB.

Last October, the the U.S. Court of Appeals for the Washington, D.C. Circuit struck down the clause.

With Friday’s motion, the DOJ has sided with the appeals court in favor of removing the clause and allowing the president to remove the CFPB’s director at will.

The real remedy

CFPB supporters may see this as a major blow to the agency. Others see striking down the “for cause” provision as a shortsighted, limited solution.

In fact, PHH, the mortgage lender that started it all by challenging the CFPB’s constitutionality wants the agency completely dissolved.

However, history shows that the courts are not willing to go down that route. “Unlike the legal position taken by PHH (which strongly argues that nothing can correct the constitutional defects inherent in the structure of the CFPB), the Department of Justice argues in its brief that the remedy adopted by the three-judge panel (i.e., striking the “for cause” provision and allowing the president to fire the Director of the CFPB without cause) is correct.

Importantly, this remedy was the focal point of a Supreme Court case written by the Chief Justice in 2010,” Lynyak points out. Lynyak is referring to 2010’s Free Enterprise Fund v. Public Company Accounting Oversight Board ruling. In that case, the court also struck down the “for cause” provision.

Constitutionality

“In addition, while the DOJ concedes that the PHH case could be decided without addressing the constitutional issues, it correctly indicates that at some point in the immediate future the constitutionality of the CFPB will have to be addressed,” adds Lynyak.

This may eventually leave the CFPB’s future in the hands of the nation’s highest court.

“Whether the determination is made in this case or another case, eventually an inferior court will issue a decision adverse to the CFPB that will force the U.S. Supreme Court to take up the case,” Lynyak tells Bloomberg Law.

It could go all the way

It’s hard to predict whether this case will go all the way to U.S. Supreme Court.

What we do know is that the court’s ruling could have a major effect on any business offering financial services.

A rehearing is scheduled for May 24. If the court upholds their decision to get rid of the “for cause” provision, President Trump can dismiss the CFPB’s current director, Richard Cordray. Trump could then replace Cordray with a director he deems more business friendly.

Consistent in its inconsistency

Regardless of who takes the director role, the financial services industry should be open to both the pros and cons of allowing the CFPB’s director to be replaced at will by the president.

A business friendly director appointed by one president, can just as easily be replaced by the next administration.Click To Tweet

The cost of an inconsistent CFPB can’t be overlooked in the push to reform the troubled agency.

#CFPB

Staff Writer, Arra Dacquel is a San Francisco based writer. She has a bachelor’s degree in political science from UC Davis and is currently studying web development. She’s obsessed with tech news and corgis, but not in that order.

Business News

List of Austin tech companies recalling staff to the office (or not)

(BUSINESS NEWS) Many Austin tech companies were reluctant to send people home when COVID-19 hit – will they be equally reluctant to put employees back in desks?

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The masks are coming off in America and agree with that practice or not, many employers are in an ongoing series of meetings regarding bringing staff back into the office.

Large companies are quickly playing commercial real estate hot potato – we recently broke the story that Dell had not only sold some of their massive campus near Austin, but rented out the third floor of their building to the Army Futures Command (AFC). As the dust settles on these contractions, the next step is bringing humans back into said buildings.

The spectrum of individuals’ emotions regarding this return varies from enthusiasm, to trepidatious, to complete refusal to return.

As the global pandemic hit and employers were responding so differently to sending folks home, our list of Austin tech companies sending folks home (or NOT sending employees home) went viral.

At the time, we noted that keeping humans in the office makes sense for some sectors (service, hospitality, medical, even financial), called it an “impossible situation” for business leaders, but some employers were stupidly insensitive…

One executive told workers as they were allowed to work from home to not expect it to be a “corona vacation” (which did NOT go over well).

Our question is: Will employers handle a return to the office more gracefully than when they sent folks home?

Just as protocols were untested sending employees home, as some employers get the itch to call them back into the office, a whole new set of unchartered protocols will be implemented.

What follows are quotes from employees telling us about their companies’ statuses. We will update this list over time as we learn more. If there are updates to your company’s status, let us know here.

– Cognite AS

“As of June 1, remote/on-site as we wish. Fridays in-office preferred for team lunch/team building days. Must be vaccinated with shot record proof uploaded to our HR system to attend in-person events.”

– EpisodeSix

“Devs and project related roles remote. HR in office. C level occasionally in office.”

– FEMA/DHS

“Currently 100% Telework. Plan to start coming back to office August 31, however, it has not yet been decided that everyone will return to office. Some may continue some % telework.”

– Indeed

“Currently remote – working on hybrid and fully remote scheduling when offices reopen.”

– NFP

“One week on, one week off since May 1 until they bring everyone back full time. No announcement yet but it can’t be far away. No masks if you’re vaccinated. Verify health status every day with an app.”

– PayPal

“Continuing with remote work until at least September. Expecting more details on the return to office plan in the next few weeks. Likely it will be a hybrid model depending on the team/business unit.”

– StitchFix

“Fully remote CX based in Austin (90 mile radius).”

– T3

“Going back to the office September 13 with a hybrid wfh/in-office blend we are currently working on team by team. With this (and the most exciting part) we’re also figuring out meetings days or times vs no fly zones so we can all focus on working time more. Not sure about masks – I think you’d only come in office if you’ve been vaccinated. We’ve also hired a lot of people not in Austin recently, so T3 is very open to remote workers.”

– Verb

“Currently, the office is open for those who want to use it, but not required. We’re told we’ll be hybrid but we’re still waiting to hear what the stipulations of that are.”


Click here to add your company to the list or to update the information listed above.


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Business News

Go with the Floww: A company matching startups, venture capitalists on merit

(BUSINESS NEWS) Floww has created an effective, modern way to raise millions of dollars for many startups and venture capitalists virtually.

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A tablet open to stocks and investments numbers venture capitalists use

As data-driven decision-making continues to become the standard across multiple industries, one company is bringing the philosophy to venture capitalists.

Floww, a marketplace designed to allow founders to pitch to investors based on merit, announced that it has raised a staggering $6.7 million to date in seed funding from angel investors and family offices. Current investors include Google’s head of FinTech in the United Kingdom Pip Baker, Angus Davidson, Ramon Mendes De Leon, and more. According to Floww, the money will be used to build out the platform and give startups access to over 500 VCs, accelerators, and angel networks.

“In an age of virtual meetings and connections, the need for coffee meetings on Sand Hill Road or Mayfair is gone,” said founder and CEO of Floww Marijn De Wever. “What we need now are global connections, allowing VCs to engage in merit-based investing using data and metrics.”

Floww charges a monthly fee to venture capitalists, accelerators, and other private equity firms to use their platform. Startups, on the other hand, have the option of using Floww’s services for free or enrolling in a premium model that allows their deal to be sent to multiple VCs. Floww then provides the startups with a suite of tools and materials to create a digital profile, with dynamic charts and tables that highlight a business’s potential to VCs. Floww also claims to handle deal-sourcing, CRM, and reporting for investors.

Floww’s claim is a bold one, especially considering that many VCs handle deal-sourcing and CRM in-house. The company also doesn’t explicitly say what constitutes “merit” in matching VCs with startups. Other than it clearly being a data-driven pairing, there aren’t any specifics as to what thresholds a startup will need to meet in order to match with a VC. The closest existing competitor to Floww is AngeList, a website also aimed at matching investors with various startups.

Whether or not Floww’s merit-based matching system will take off is still under review, but VCs willing to pay the monthly fee for Floww’s service will expect, at a minimum, that founders will have thought through these obstacles before looking for an investment.

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Business News

Missing office culture while working remotely? This tool tries to recreate it

(BUSINESS NEWS) This startup just released new software to help you reproduce the best parts of in-person office interactions while you work from home.

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Loop Team product page, trying to create an office culture experience remotely.

Are you over working from home? Feeling disconnected from your co-workers? Well look no further: The startup Loop Team just released a tool that reproduces the office culture experience virtually.

“We’ve looked at a lot of the interactions that happen when you’re physically in an office — the visual communication, the background conversations, the hallway chatter,” said Loop Team’s founder and CEO Raj Singh in an interview with TechCrunch. “[W]e built an experience that effectively is a virtual office. And so it tries to represent the best parts of what a physical office experience might be like, but in a virtual form.”

Singh’s company, founded pre-COVID, is posed as a solution to feeling “out of the loop” while working remotely. During the pandemic, where virtually all of us are working from home, this technology is needed more than ever.

How it works is by essentially recreating an office experience on a virtual platform. Somewhere between Zoom and Slack with some added features, Loop Team lets you know who’s free to chat, who’s in meetings, and allows you to have private discussions using audio, video, and screen share. It’s ideal for working on projects together.

Loop’s layout is unique in the sense that it is designed to show you conversations in a clear, direct way – exposing relevant items and hiding the rest. Also, employees who miss meetings have the ability to review what they missed, making it perfect for companies that hire across time zones.

The platform was made available December 1st free of charge, but Singh is hoping to introduce a paid version next year. Pricing will likely reflect team size and should remain free for teams of 10 or less.

I’m a big fan of software that allows you to feel closer and more connected to your co-workers. Do I think anything will ever compare to a true, in-person office experience? Definitely not. That being said, I value this kind of progress, especially since I don’t think office culture en mass will make a return any time soon, regardless of vaccinations.

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