Supreme Court allows CFPB to continue, says president can fire

The Supreme Court in a ruling on Monday allowed the Office of Financial Consumer Protection to continue operating, but said the director of consumer surveillance could be removed by the President of the United States “at will.”

The decision, written by Supreme Court President John Roberts, coincided with the argument of a California-based law firm that the CFPB’s leadership by a single director who was removable “for cause only” violated the separation rule. of powers under the United States Constitution.

The ruling overturns a ruling by a federal district court and a decision of the appeals court that had rejected the law firm’s arguments.

“Therefore, the agency can continue to operate, but its Director, in light of our decision, must be removed by the President at will,” Roberts wrote in his decision.

A police officer walks in front of the United States Supreme Court on April 6, 2020 in Washington, DC.

Alex Wong | fake pictures

The CFPB oversees consumer financial markets such as credit cards and home mortgages. It returned nearly $ 12 billion to consumers through 2017, before greatly restricting enforcement actions under President Donald Trump.

The CFPB was first conceived by Senator Elizabeth Warren when she was a professor at Harvard Law School.

Subsequently, Congress established the board under President Barack Obama in the wake of the 2008 financial crisis.

The constitutionality of the office was questioned by the firm Seila Law, which alleged that the protection of the CFPB director against dismissal by the presidency was illegal. The company, which provides debt-related legal services to clients, was fighting a civil lawsuit for information and CFPB documents related to the company’s practices.

Under the 2010 law establishing the office, the director is appointed for a period of five years and can only be removed for “inefficiency, breach of duty, or misappropriation of office.”

In his ruling, Roberts noted that the CFPB’s leadership structure “has no foothold in history or tradition,” and that Congress has provided protection to top agency officials in just four. ” isolated instances. ”

Those went to the Comptroller of the Currency for just a one-year period during the Civil War, the Office of the Special Adviser, the administrator of the Social Security Administration and the director of the Federal Housing Finance Agency. “

“Other than the one-year glitch for the Comptroller of the Currency, these ex-amples are modern and controversial; and they do not involve a regulatory or enforcement authority comparable to that exercised by the CFPB,” wrote Roberts.

He added that “the configuration of the sole Director of the CFPB is also incompatible with the structure of the Constitution, which, with the sole exception of the Presidency, scrupulously avoids concentrating power in the hands of a single individual.”

The case decided on Monday by the Supreme Court is formally known as the Seila Law v. Consumer Financial Protection Office, No. 19-7.

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