There's good news and bad news in the Supreme Court's CFPB ruling

Marco Green
June 30, 2020

Previously, the director, who is appointed by the president for a five-year term, could only be removed for "inefficiency, neglect of duty, or malfeasance in office", so that the independent federal agency would be shielded from political pressure. "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will".

The bureau, the brainchild of former Democratic presidential candidate Elizabeth Warren, has been politically polarizing, with Democrats citing a need to combat financial-industry excesses and Republicans warning of runaway government regulation. When the agency a a sent a demand for information, the law firm refused and alleged the bureau was operating unconstitutionally.

"The director of that agency still works for the American people".

Senate Banking Committee ranking member Sherrod Brown (D-Ohio) said at the time, "The CFPB under President Trump has used this pandemic as an excuse to weaken protections for consumers - enabling predatory lending, watering down credit reporting protections and fair lending laws, and making it easier for credit card and debit card companies to rip off their consumers". That gave rise to an office exercising executive power too unaccountable to the president, the high court ruled.

The CFPB survives, however, because Roberts said the removal protection for the CFPB director can be severed from the rest of the law creating the agency.

Warren touted the bureau during her presidential campaign, saying it returned more than $12 billion to consumers under the Obama administration.

"My first choice is a strong consumer agency", Warren told the HuffPost at the time, outlining her opposition to a CFPB with less independence. "My second choice is no agency at all and plenty of blood and teeth left on the floor".

"While the President has full confidence in the current director of the CFPB and believes that she has fully upheld her statutory duties, the President also believes that no official should hold such enormous powers without, at least, being directly accountable to a democratically-elected President regardless of party affiliation", White House press secretary Kayleigh McEnancy said in a statement following the ruling.

Chief Justice John G. Roberts Jr. wrote the majority opinion in the constitutional challenge by Seila Law, a debt-relief law firm based in California.

The decision should have no immediate impact at the agency, because the current director, Kathy Kraninger, was appointed by President Trump in 2018. Now, if Joe Biden wins, he can fire her in January 2021 and replace her with an actual consumer advocate.

While overshadowed by the release of the Court's much-anticipated Louisiana abortion ruling, legal experts warned that the decision could have far wider-reaching consequences concerning executive power that may play a significant role in the court's pending decision concerning President Donald Trump's tax returns.

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