Supreme Court Agrees to Hear Challenge to Consumer Bureau’s Authority

WASHINGTON – The Supreme Court agreed Friday to wade into a politically charged dispute over whether the Consumer Financial Protection Bureau, created in the wake of the 2008 financial crisis, is constitutional.

The justices will be reviewing an appeals court decision that upheld the structure of the watchdog agency, but the Trump administration, among others, contends the bureau is unlawfully autonomous.

The CFPB was created as part of the Dodd-Frank legislation in response to the financial crisis.

But 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.”

The Justice Department has already taken the position the separation of powers question presented by the law firm is “important” and “warrants this Court’s review in an appropriate case.”

Although the justices did not explain their rationale for taking up the case, they did ask that all sides in the case brief and prepare to argue an additional question: Whether, if the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of  powers, can it be severed from the Dodd-Frank Act?

The U.S. Chamber of Commerce, Cato Institute, Southeastern Legal Foundation, state of Texas and a group of separation of powers scholars are among those who have filed briefs in the case.