Latest development in debate over CFPB’s leadership structure focuses on the president’s authority to remove the bureau’s director for cause.
10/11/2019 10:00
The saga continues in the debate over the constitutionality of the Consumer Financial Protection Bureau’s leadership structure.
Democrat leaders in the U.S. House of Representatives on Oct. 7 filed a brief asking the U.S. Supreme Court to deny hearing a case challenging the bureau’s constitutionality, The Hill reports. The Democrats in the House continue to support the current structure of the bureau, which includes a director removable only “for cause.”
In September, the CFPB’s attorneys and the U.S. Department of Justice filed a brief asking the Supreme Court to take up the matter in Seila Law v. Consumer Financial Protection Bureau.
In the Seila Law case, a Ninth Circuit panel unanimously ruled the structure of the CFPB, with a single director at the helm, is constitutional, ACA International previously reported.
However, the House Democrats argue in their brief “that the structure of the CFPB, a powerful financial regulator, infringes on the president’s executive authority,” according to The Hill. “The brief also noted that because the CFPB is controlled by a single director, the president wields significant power over the agency by choosing who leads it.”
Seila Law also filed a brief for the Supreme Court to take up the case, but it is not part of the court’s docket for the October term.
Seila Law v. Consumer Financial Protection Bureau is by no means the first case focused on the bureau’s leadership structure.
Earlier this year, a case with several plaintiffs contesting the constitutionality of CFPB’s structure was denied for hearing by the Supreme Court, ACA previously reported. The Supreme Court refused to hear the case from State National Bank, of Big Spring, Texas, which joined plaintiffs Competitive Enterprise Institute, a nonprofit public policy organization, and 60 Plus Association, a seniors’ advocacy group.
In 2018, the United States Court of Appeals for the District of Columbia Circuit handed down its highly anticipated decision in PHH Corporation v. Consumer Financial Protection Bureau (No. 15-1177), the landmark case challenging the constitutionality of the CFPB’s authority. The 250-page en banc opinion issued by the full bench of the D.C. Circuit Court says the agency’s single-director structure is indeed constitutional and that its director can only be fired by the president for “inefficiency, neglect of duty, or malfeasance in office,” ACA previously reported. The 7-3 ruling overturns, in part, a 2-1 ruling in 2016 by a three-judge panel of the same court, and notably has an impact on the administration’s policy goals to continue to roll back financial regulations and defang the bureau.
The House leaders’ brief filed Oct. 7 asks the Supreme Court to abide by that ruling, according to The Hill, “arguing that the president has ample authority to fire the bureau’s director if she or he is not enforcing the law.”
CFPB Director Kathy Kraninger also weighed in on the matter recently in letters to House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., CNBC reports.
“Mindful of the bureau’s role as an executive agency within the Executive Branch […] I have decided that the Bureau should adopt the Department of Justice’s view,” Kraninger wrote in letters, according to the CNBC article.
Meanwhile, Kraninger will testify on the CFPB’s semiannual report at 10 a.m. EST Oct. 16 before the House Financial Services Committee and at 10 a.m. EST Oct. 17 before the Senate Banking Committee.