The Supreme Court in a ruling Monday allowed the Consumer Finance Protection Bureau to continue operating, but said the consumer watchdog director could be removed by the President of the United States “at will”.
The decision, written by Supreme Judge John Roberts, agreed with the argument of a California-based law firm that the CFPB’s leadership by a single director who was removable “just for cause” violated the separation of powers under the Constitution of the United States.
Ruling 5-4 reverses a federal district court ruling and a court of appeal decision that rejected the law firm̵
“The agency may therefore continue to operate, but its director, in light of our decision, must be removable from the president at will,” wrote Roberts in his majority decision, where he joined the other four conservative judges of the court. .
A police officer walks past the United States Supreme Court on April 6, 2020 in Washington, DC.
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The CFPB oversees consumer financial markets such as credit cards and real estate mortgages. It returned nearly $ 12 billion to consumers throughout 2017, before largely limiting enforcement actions under President Donald Trump.
The CFPB was first conceived by Senator Elizabeth Warren when he was a professor at Harvard Law School.
Subsequently, the council was established by Congress under President Barack Obama in the wake of the 2008 financial crisis.
The constitutionality of the bureau was contested by Seila Law, which claimed that the protection of the CFPB director from dismissal by the presidency was illegal. The company, which provides debt-related legal services to customers, was fighting a civilian request for information and documents from the CFPB relating to the company’s practices.
Under the 2010 law establishing the bureau, the director is appointed for a five-year term and can only be removed for “inefficiency, neglect or maladministration in office”.
In his ruling, Roberts noted that the CFPB command structure “has no foothold in history or tradition” and that Congress has provided protection from removal to key agency officials in only four “isolated cases”.
Those were for the currency controller for a single period of one year during the civil war, the Special Council Office, the administrator of the Social Security Administration and the director of the Federal Housing Finance Agency. “
“Aside from the one-year blip for the currency controller, these examples are modern and disputed and do not involve regulatory or enforcement authorities comparable to those exercised by the CFPB,” wrote Roberts.
He added that “the configuration of the CFPB’s sole director 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 each individual.”
The case decided Monday by the Supreme Court is formally known as Seila Law v. Consumer Financial Protection Bureau, no. 19-7.