Justices Wrestle With President’s Power to Fire Consumer Advocate

March 3, 2020 by Dan McCue
A model of the Supreme Court chamber. (Photo by Dan McCue)

WASHINGTON – The Supreme Court wrestled Tuesday with the politically charged dispute over whether the Consumer Financial Protection Bureau, created in the wake of the 2008 financial crisis, is constitutional.

The arguments the justices heard Tuesday stemmed from an appeals court decision that upheld the structure of the watchdog agency.

Under the Dodd-Frank Act that created the CFPB, its director is appointed by the president and confirmed by the Senate to a five-year term. The president can only remove a director for “inefficiency, neglect of duty or malfeasance in office.”

That means that an incoming president can’t immediately fire the agency’s head, appointed in the previous administration, without cause.

Defenders of the bureau’s structure say it is good in that it insulates the agency’s head from pressure by the president.

But the Trump administration, among others, contends the bureau is unlawfully autonomous.

Seila Law LLC, the California law firm that is the named petitioner in the case says the structure of the bureau violates the separation of powers.

“The Constitution empowers the president to keep federal officers accountable by removing them from office,” the law firm’s writ of certiorari states. “While in limited circumstances the Court has upheld the constitutionality of certain multi-member ‘independent’ agencies, whose leading officers the president can remove only for cause, the Court has never upheld the constitutionality of an independent agency that exercises significant executive authority and is headed by a single person.”

“In 2010, Congress created just such an agency: the CFPB,” the brief continues. “Headed by a single director removable only for cause, the CFPB possesses substantial executive authority, including the power to implement and enforce 19 federal consumer-protection statutes.”

During arguments Tuesday,Justice Brett Kavanaugh called that restriction “troubling,” but most of his colleagues seemed to disagree.

Justice Ruth Bader Ginsburg, for instance, who described the restrictions as “modest.”

The impact of the justices’ decision in the case could go beyond the CFPB because the heads of other so-called independent agencies have a similar restriction on being fired. Those agencies include the Federal Reserve, Federal Deposit Insurance Corporation, Federal Trade Commission, Federal Communications Commission and Securities and Exchange Commission.

A decision in the case, Seila Law LLC v. Consumer Financial Protection Bureau, 19-7, is expected by the end of June.

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