Hearing arguments in Washington Tuesday, the court’s conservatives suggested they agreed with Trump administration contentions that the Constitution requires the president to have broad ability to fire the agency’s director. When Congress set up the agency, it gave the director a five-year term and said the person could be ousted only for specified reasons.
“The head of this agency will go at least three or four years into the next president’s term, and the next president might have a completely different conception of consumer financial regulatory issues, yet will be able to do nothing about it,” Kavanaugh said.
The case could mean a fundamental change for the CFPB, created as the brainchild of now-Senator
If they decide the agency’s setup is unconstitutional, the justices have several options. They could go as far as abolishing the agency, though the 70-minute session suggested that outcome was unlikely.
The Supreme Court’s ruling, due by late June, could affect other federal agencies, most immediately the
The fight centers on a provision in the 2010 Dodd-Frank Act that says the president can remove the CFPB director only for “inefficiency, neglect of duty or malfeasance in office.”
Supporters say that helps ensure the bureau isn’t beholden to powerful banks. But critics say the Constitution doesn’t let Congress give an agency director that much freedom from elected officials.
“It stops the president from at whim removing someone, replacing someone with someone who is loyal to the president rather than to the consumers that the bureau is set up to serve,” she said.
“They don’t even have to go to Congress to get their money,” Roberts said. “Isn’t that something that we should factor into the substantive question on his removability?”
The court’s liberal justices said the CFPB’s independence isn’t unusual for financial regulatory agencies. The Federal Reserve Board of Governors, for example, has members who serve 14-year terms, and several banking regulators set their budgets without congressional input.
“I don’t know how to make these decisions,” she said. “Why don’t we just leave it to the political branches, who actually know about these things?”
The current director,
The administration says the court can fix the constitutional problem by stripping the removal protections from the law, leaving the president broad power to fire the director. Paradoxically, that would make Kraninger more vulnerable to being replaced should a Democrat win November’s presidential election.
In upholding the agency, a federal appeals court pointed to a 1935 Supreme Court decision that provides the constitutional justification for dozens of independent federal agencies. That ruling upheld provisions that insulate the five members of the
The Trump administration contends the CFPB is different from the FTC because it has a single director, rather than a multi-member commission. FTC commissioners serve seven-year terms that expire at different times, and no more than three of the five members can be of the same political party.
That contention drew pushback Tuesday from the court’s liberals, who said the president might have even less control over an agency like the FTC.
“Even if you can make a generalization, it cuts the other way,” Kagan said. “A multi-member commission, just because it diffuses power, is more difficult to influence.”
The case is Seila Law v. CFPB, 19-7.
(Updates with excerpts from argument starting in fourth paragraph)
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