Supreme Court Makes It Easier for President to Remove CFPB Head

Ruben Hill
June 29, 2020

The Supreme Court ruled Monday the structure of the Consumer Financial Protection Bureau (CFPB), a consumer watchdog that was the brainchild of Democratic Senator Elizabeth Warren, is unconstitutional, but stopped short of dismantling the agency.

In creating this new agency, Congress gave the CFPB extensive rulemaking, enforcement, and adjudicatory powers, including the authority to conduct investigations, issue subpoenas and civil investigative demands, initiate administrative adjudications, prosecute civil actions in federal court, and issue binding decisions in administrative proceedings. Its congressional sponsors sought to shield the agency from political influence by giving the director a five-year term in office.

The case of Seila Law vs. CFPB began when agency officials were looking into allegations that a small Orange County law firm was violating its restrictions on the advertising and marketing of debt-relief services. Instead, the Court has sided with those who have spent the last decade trying to undermine the CFPB's effectiveness and weaken its authority, efforts that have often been led by the industries the agency is charged with regulating.

But, as seems to occur with some regularity, the US Supreme Court disagreed with the Ninth Circuit.

But the court, in an opinion by Chief Justice John Roberts, said the setup meant the CFPB's director was unaccountable to the executive branch, creating an unconstitutional diminishment of presidential power.

We are disappointed that the Court has chose to undermine the independence of the CFPB's structure and increase political influence over its work. The director of that agency still works for the American people. That person serves for a longer term than the president and can not be removed except for inefficiency, neglect, or malfeasance.

The Court's answer is "yes", it does violate the Constitution.

We are now asked to extend...precedents to a new configuration: an independent agency that wields significant executive power and is run by a single individual who can not be removed by the President unless certain statutory criteria are met. We decline to take that step.... Along with our allies, we will continue to engage with the CFPB to push for strong protections against abusive practices and effective consumer protections, and hold the bureau accountable to its statutory mission.

The high court also found by a vote of 7-2 that the provision of the law dictating the director's removal can be struck down without invalidating the entirety of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the consumer agency.

Other reports by Click Lancashire

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