US Supreme Court rules consumer regulator structure unconstitutional


JUNE 29, 2020

The Supreme Court on Monday said the structure of the Consumer Financial Protection Board violates the Constitution.

Chief Justice John G. Roberts Jr. wrote the majority opinion.

At oral argument, Justice Ruth Bader Ginsburg said the question before the court had an “academic quality” to it. Does it intrude on the president’s constitutional authority to direct the executive branch if he is not free to fire the CFPB’s director?

The bureau was the brainchild of now-Sen. Elizabeth Warren (D-Mass.) when she was still a Harvard University law professor. It was part of the 2010 overhaul brought on by the financial crisis. Congress gave it broad powers to implement and enforce consumer protection laws and insulated it even from lawmakers by giving it its own budgetary powers.

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

But the CFPB has been a target of conservatives since its creation. Republicans and banking executives often complained that the bureau was too aggressive and pushed legal boundaries to levy exorbitant penalties. Former acting White House chief of staff Mick Mulvaney once called the CFPB a “joke” and co-sponsored legislation to get rid of it.

It is headed by a single director who is nominated by the president and confirmed by the Senate for a five-year term. The director can be removed by the president only for “inefficiency, neglect of duty or malfeasance in office,” unlike, say, Cabinet officers who serve at the president’s pleasure.

But the Constitution gives the president the power to remove top executive branch officials for any reason or no reason at all, the challengers said.

Although the removal-for-cause protection applies to other agencies, such as the Securities and Exchange Commission and the Federal Reserve Board, they have multiple-member boards, rather than a single director.

The case before the Supreme Court was brought by a California law firm that objected to the CFPB’s demand for information regarding an investigation of its practices in resolving consumer debt.

Courtesy/Source: Washington Post