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The U.S. Supreme Court handed down its ruling in Seila Law LLC v. Consumer Financial Protection Bureau, holding that the single-director structure is currently unconstitutional. Industry experts and associations shared their reactions to the ruling.
Chief Justice John Roberts issued the opinion of the court in a 5-4 decision, finding the CFPB’s leadership by a single individual, removable only for inefficiency, neglect or malfeasance violates the separation of powers.

“Under our Constitution, the ‘executive power’ — all of it — is ‘vested in a president,’ who must ‘take care that the laws be faithfully executed.’ Because no single person could fulfill that responsibility alone, the framers expected that the president would rely on subordinate officers for assistance,” Roberts wrote. “Ten years ago, in Free Enterprise Fund v. Public Company Accounting Oversight Bd., we reiterated that, ‘as a general matter,’ the Constitution gives the president ‘the authority to remove those who assist him in carrying out his duties.’ ‘Without such power, the president could not be held fully accountable for discharging his own responsibilities; the buck would stop somewhere else.’

“The president’s power to remove — and thus supervise — those who wield executive power on his behalf follows from the text of Article II, was settled by the First Congress, and was confirmed in the landmark decision Myers v. United States. Our precedents have recognized only two exceptions to the president’s unrestricted removal power,” wrote Roberts, who also authored the decision in Free Enterprise Fund. “In Humphrey’s Executor v. United States, we held that Congress could create expert agencies led by a group of principal officers removable by the president only for good cause. And in United States v. Perkins, and Morrison v. Olson, we held that Congress could provide tenure protections to certain inferior officers with narrowly defined duties.

“We are now asked to extend these precedents to a new configuration: an independent agency that wields significant executive power and is run by a single individual who cannot be removed by the president unless certain statutory criteria are met,” Roberts continued. “We decline to take that step. While we need not and do not revisit our prior decisions allowing certain limitations on the president’s removal power, there are compelling reasons not to extend those precedents to the novel context of an independent agency led by a single director. Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control.

“We therefore hold that the structure of the CFPB violates the separation of powers,” Roberts stated. “We go on to hold that the CFPB director’s removal protection is severable from the other statutory provisions bearing on the CFPB’s authority. The agency may therefore continue to operate, but its director, in light of our decision, must be removable by the president at will.”

CFPB Director Kathy Kraninger issued an initial statement through Twitter, stating, “Today’s Supreme Court decision finally brings certainty to the operations of the bureau. We will continue with our important mission of protecting consumers with no question that we are fully accountable to the president. Consumers and market participants should understand that the same rules continue to govern the consumer financial marketplace.”

“Today’s decision represents an important victory for the fundamental principle that government officials should be accountable to the American people,” said White House press secretary Kayleigh McEnany. The Constitution vests the power of the executive branch solely in the President without any limitation on his ability to remove leaders of executive agencies. As Alexander Hamilton so eloquently argued in Federalist 70, unity in the executive branch is essential for providing the President with the authority needed for the effective administration of government and to make the President fully accountable to the electorate every four years for the management of the executive branch, which inherently includes the appointment and removal of government officials.

“The Consumer Financial Protection Bureau (CFPB), established by the Dodd-Frank Act, was instead designed based on a distrust of the American people’s ability to participate in their government,” she continued. “The CFPB is exempt from the congressional appropriations process, because CFPB’s creators did not trust democratically-elected representatives with funding the agency. Similarly, the CFPB’s single director was insulated from removal by the President, because the CFPB’s creators did not trust Presidential elections. In practice, the CFPB was designed to prevent the American people, to the maximum extent possible, from exercising oversight over CFPB’s sole director, who was granted vast authority over the financial lives of every American. While the President has full confidence in the current director of the CFPB and believes that she has fully upheld her statutory duties, the President also believes that no official should hold such immense powers without, at least, being directly accountable to a democratically-elected President regardless of party affiliation.

“Accordingly, today’s decision helps restore to Americans power over their government that the Dodd-Frank Act took away to protect entrenched and unelected bureaucrats in Washington,” McEnany said. “It respects and preserves the role of American voters in our constitutional system and should stand as an important precedent for ensuring that our Republic remains a government of the people, by the people, for the people.”

Francis X. Riley III, partner and co-chair of the Consumer Financial Services Litigation Group at Saul Ewings Arnstein & Lehr LLP, noted that SCOTUS’ decision carves out from the Dodd-Frank Act the for-cause requirement for the removal of the director.

“Thus, that requirement no longer exists and by way of the decision the director is no removable at-will (for any reason or no reason) by the president. The court did not hold that a single director was an unconstitutional structure, i.e., a panel is required. Thus, the director may continue to act as she has and her decisions have the weight ascribed to them by Dodd-Frank. SCOTUS remanded the matter to the 9th Circuit for it to determine if the CID at issue was ratified. I think that CFPB can moot this issue by having the director (who position is now constitutional because her position is at-will) approve the CID.

“I believe that this goes equally for any currently pending CIDs and court or administrative actions, as well as notices of final rules: the director should be able to merely approve the prior determinations to bring serve the CIDs, file the actions, or the staff determinations unpinning the current notice of final rules. As to previous consent order, the defendants/respondents all agreed to settle the matter rather than challenge the bureau’s authority, thus settling and releasing such claims. I think this decision does little to upset the past actions of the CFPB. What it does do is not burden an incoming president with the prior president’s appointed director.”

“With this particular case settled, we hope the Bureau can focus on its core mission of protecting consumers from unfair, deceptive or abusive practices,” said Diane Tomb, American Land Title Association’s chief executive officer. “For several years, ALTA has endorsed a multi-member commission as the most effective form of governance for the Bureau, andc hope Congress will ultimately take that step. ALTA strongly supports S. 3990, the Financial Product Safety Commission Act of 2020. This legislation would ensure the bureau’s political independence by replacing the single director structure with a five-person, bipartisan commission, as originally intended by the U.S. House of Representatives when it first passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. In addition to safeguarding the CFPB from executive and political interference of any kind, a Senate confirmed, bipartisan commission will provide a balanced and deliberative approach to supervision, regulation and enforcement by encouraging input from all stakeholders.”

American Bankers Association President and CEO Rob Nichols said: “Today’s decision from the U.S Supreme Court on the constitutionality of the CFPB’s leadership structure resolves important questions surrounding the bureau’s design and its future. We still believe that Congress has an opportunity to strengthen the CFPB over the long term by converting the bureau into a five-member, bipartisan commission as envisioned in drafts of the Dodd-Frank Act. This important change would balance the bureau’s needs for independence and accountability, while broadening perspectives on rulemaking and enforcement. It would also ensure the CFPB’s long-term stability, which would benefit consumers, financial institutions and the broader economy.”

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