SCOTUS to Hear Possible Game-Changing CFPB Case

High Court to review case that challenges the constitutionality of the CFPB’s leadership structure.

10/20/2019 8:00 AM

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SCOTUS to Hear Possible Game-Changing CFPB Case

The U.S. Supreme Court on Friday will review Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of its leadership structure next year.

The Supreme Court granted Seila Law’s petition for Writ of Certiorari requesting that it review Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of the CFPB’s leadership structure, ACA International previously reported.

The Supreme Court’s review of the structure the CFPB is monumental. And, this marks the first time since the CFPB’s inception that agency leadership and the DOJ will not defend the structure of the bureau in litigation.

What does this mean? It depends on who you ask.

ACA International CEO Mark Neeb released a statement Friday in a members-only email saying, “The ongoing questions surrounding the constitutionality of the bureau’s leadership structure are problematic for all industries impacted by regulatory policies and enforcement decisions made by the CFPB. ACA International seeks certainty and clarity from the bureau, particularity as the agency moves forward in the debt collection rulemaking process. ACA has urged the bureau to provide clear rules for the ARM Industry that address the use of modern technology."

Neeb is referencing the industry’s request for clarity regarding compliance with the Fair Debt Collection Practices Act. The CFPB has taken important steps to address the industry’s concerns by issuing a Notice of Proposed Rulemaking to update the FDCPA – which ACA commented on in a 154-page letter.

Thus, the industry has a huge stake in the case and will continue to monitor the legal challenge as it unfolds.

At issue in the Supreme Court is whether the provision of the law allowing the president to remove the agency's director only for cause violates the constitutional separation of powers. While serving on the U.S Court of Appeals for the D.C. Circuit in 2016, Supreme Court Justice Brett Kavanaugh authored a majority panel opinion in PHH Corp v. CFPB declaring the Bureau of Consumer Financial Protection unconstitutional.  The New York Times  previously called this opinion one of Kavanaugh’s most well-known among the more than 300 opinions he contributed to during his appointment to the D.C. Circuit Court of Appeals in 2006.

Kraninger, who assumed the role of director in December 2018, appeared before House and Senate committees in October 2019 regarding the CFPB’s semiannual report. During both hearings, lawmakers referenced questions surrounding the bureau’s leadership structure with commentary along political lines. It has been well publicized that Kraninger commented on the case in letters to House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., supporting the justice department’s view. 

In the Oct. 16, 2019, House Financial Services Committee hearing, U.S. Rep. Carolyn Malone, D-N.Y., was joined by other Democrats in supporting the CFPB’s current structure. She said, “Congress deliberately created the CFPB as an independent regulator. For you to second-guess Congress' judgment on this constitutionality of the CFPB and to argue against the CFPB's structure in court is disrespectful of Congress.”

And, the next day, Oct. 17, 2019, during the Senate Banking, Housing and Urban Affairs Committee, Chairman Mike Crapo, R-Idaho, said, “It remains clear that the fundamental structure of the CFPB must be reconsidered to make it more transparent and accountable.  I support the transition of the CFPB to a bipartisan commission from a single director; subjecting the CFPB to appropriations; and providing a safety and soundness check for prudential regulators.”

When Crapo asked Kraninger to comment on the issue following criticism from committee Ranking Member U.S. Sen. Sherrod Brown, D-Ohio, she said, “Since the earliest days of the CFPB, the constitutionality of the director’s removal provision has been raised and challenged legally by the bureau in pursuit of our mission.  Litigation over this question continues to cause significant delays in some of our enforcement and regulatory actions. I believe this dynamic will not change until the constitutional question is resolved by the Supreme Court or Congress. My position on this question will not stop the bureau from fulfilling its statutory responsibilities.”

ACA International will continue to follow this case.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

SCOTUS to Hear Possible Game-Changing CFPB Case

The U.S. Supreme Court on Friday will review Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of its leadership structure next year.

The Supreme Court granted Seila Law’s petition for Writ of Certiorari requesting that it review Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of the CFPB’s leadership structure, ACA International previously reported.

The Supreme Court’s review of the structure the CFPB is monumental. And, this marks the first time since the CFPB’s inception that agency leadership and the DOJ will not defend the structure of the bureau in litigation.

What does this mean? It depends on who you ask.

ACA International CEO Mark Neeb released a statement Friday in a members-only email saying, “The ongoing questions surrounding the constitutionality of the bureau’s leadership structure are problematic for all industries impacted by regulatory policies and enforcement decisions made by the CFPB. ACA International seeks certainty and clarity from the bureau, particularity as the agency moves forward in the debt collection rulemaking process. ACA has urged the bureau to provide clear rules for the ARM Industry that address the use of modern technology."

Neeb is referencing the industry’s request for clarity regarding compliance with the Fair Debt Collection Practices Act. The CFPB has taken important steps to address the industry’s concerns by issuing a Notice of Proposed Rulemaking to update the FDCPA – which ACA commented on in a 154-page letter.

Thus, the industry has a huge stake in the case and will continue to monitor the legal challenge as it unfolds.

At issue in the Supreme Court is whether the provision of the law allowing the president to remove the agency's director only for cause violates the constitutional separation of powers. While serving on the U.S Court of Appeals for the D.C. Circuit in 2016, Supreme Court Justice Brett Kavanaugh authored a majority panel opinion in PHH Corp v. CFPB declaring the Bureau of Consumer Financial Protection unconstitutional.  The New York Times  previously called this opinion one of Kavanaugh’s most well-known among the more than 300 opinions he contributed to during his appointment to the D.C. Circuit Court of Appeals in 2006.

Kraninger, who assumed the role of director in December 2018, appeared before House and Senate committees in October 2019 regarding the CFPB’s semiannual report. During both hearings, lawmakers referenced questions surrounding the bureau’s leadership structure with commentary along political lines. It has been well publicized that Kraninger commented on the case in letters to House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., supporting the justice department’s view. 

In the Oct. 16, 2019, House Financial Services Committee hearing, U.S. Rep. Carolyn Malone, D-N.Y., was joined by other Democrats in supporting the CFPB’s current structure. She said, “Congress deliberately created the CFPB as an independent regulator. For you to second-guess Congress' judgment on this constitutionality of the CFPB and to argue against the CFPB's structure in court is disrespectful of Congress.”

And, the next day, Oct. 17, 2019, during the Senate Banking, Housing and Urban Affairs Committee, Chairman Mike Crapo, R-Idaho, said, “It remains clear that the fundamental structure of the CFPB must be reconsidered to make it more transparent and accountable.  I support the transition of the CFPB to a bipartisan commission from a single director; subjecting the CFPB to appropriations; and providing a safety and soundness check for prudential regulators.”

When Crapo asked Kraninger to comment on the issue following criticism from committee Ranking Member U.S. Sen. Sherrod Brown, D-Ohio, she said, “Since the earliest days of the CFPB, the constitutionality of the director’s removal provision has been raised and challenged legally by the bureau in pursuit of our mission.  Litigation over this question continues to cause significant delays in some of our enforcement and regulatory actions. I believe this dynamic will not change until the constitutional question is resolved by the Supreme Court or Congress. My position on this question will not stop the bureau from fulfilling its statutory responsibilities.”

ACA International will continue to follow this case.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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