The court said a key 1935 decision “allowed Congress to grant protection for removal by cause to a body of multi-member experts who were balanced on partisan lines,” but did not extend that authority to a single director vested with executive power.
The decision could have significant implications for the future of the similarly structured Federal Housing Finance Agency, the supervisor of mortgage giants Fannie Mae and Freddie Mac. Like the CFPB chief, FHFA director is appointed for a period of five years and can only be removed for cause.
Since the day it opened its doors nine years ago, the CFPB, a brainchild of Senator Elizabeth Warren (D-Mass.), Then a Harvard law professor, was polarizing, and Democrats chose him as a highly anticipated cop. . It beat consumers after the 2008 financial crisis, and Republicans criticized the agency as an example of regulatory overreach.
Congress established the office as part of the historic 2010 Dodd-Frank financial review, mandating that it be chaired by a single director appointed for a five-year term who could only be fired for “inefficiency, negligence in office, or misappropriation of office “in an attempt to isolate the agency from political interference. In a similar move, the Dodd-Frank authors also chose to finance the CFPB through the Federal Reserve, rather than the congressional appropriation process.
However, where Democrats see independence, Republicans see a lack of accountability. Republicans have always tried to overhaul the agency’s single director structure and replace it with a bipartisan commission similar to the leadership of other financial regulators. Republican attacks have slowed since Trump put his own people in charge of the office, but the leadership problem has never been solved.
