Supreme Court Allows Consumer Watchdog Agency to Stand, Strikes Down Internal Structure

The bronze doors of the Supreme Court

Kathy Kraninger, the current chief of the CFPB, has said she believed the president could fire her at any time.

The U.S. Supreme Court on Monday ruled that the legal stricture preventing the president from firing the head of the Consumer Financial Protection Bureau (CFPB) was unconstitutional, reasoning that the provision violated separation of powers doctrine.

"The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will".

Established after the financial crisis, the role of CFPB president was created to protect the bureau's independence and its statute said the president could remove its director only for cause, defined as "inefficiency, neglect of duty or malfeasance".

Roberts was joined by the court's four other conservatives in striking down the rules, but the court was more fractured on whether it means the entire agency has to go. The law had said the president could only remove a director for "inefficiency, neglect of duty or malfeasance in office".

"The CFPB's single-Director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual who is neither elected by the people nor meaningfully controlled (through the threat of removal) by someone who is", Roberts wrote. In a separate opinion, Justice Clarence Thomas argued that the court was wrong to sever the removal clause from the rest of the statute and should have pronounced the agency unable to act until Congress remedied the structure flaw.

"Today's decision wipes out a feature of that agency its creators thought fundamental to its mission-a measure of independence from political pressure".

Justice Elena Kagan, writing for herself and three liberal colleagues, called the majority opinion simplistic.

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"The Chief Justice's CFPB opinion is not going to get almost the attention it deserves given his far more visible concurrence in the abortion case".

Roberts wrote: "The CFPB's structure has no foothold in history or tradition".

The CFPB was the brainchild of MA senator and former Democratic presidential candidate Elizabeth Warren.

Sen. Elizabeth Warren (D-Mass.) speaks during a protest in front of the Consumer Financial Protection Bureau headquarters in Washington on November 28, 2017. For the right, which has long opposed the existence of the CFPB, the high court's majority weakened the agency's independence - which is clearly a step in Republicans' preferred direction - but left the bureau otherwise intact. But with the agency facing an unprecedented wave of consumer complaints as millions of laid-off workers deal with their creditors, lawmakers and consumer advocates charge that the bureau is exploiting the crisis to further a pro-industry agenda.

The Supreme Court is seen in Washington, June 15, 2020.

The case is Seila Law v. Consumer Financial Protection Bureau, No. 19-7, in the Supreme Court of the United States.

Experts had previously said that a decision in the case could affect how easily the president can fire a host of other heads of independent agencies, including those run by commissions.

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