High court rules president can remove CFPB director
Chief Justice John Roberts writes that the single-director structure of the Consumer Financial Protection is virtually unprecedented and violates separation of powers doctrine.
The Supreme Court ruled on June 29 that the president can remove the director of the Consumer Financial Protection Bureau at will.
The CFPB, an agency with approximately 1,500 employees, is led by a single presidentially appointed and Senate-confirmed director who serves a five-year term as established by the Dodd-Frank Act. Most independent agencies are headed by boards or commissions.
In a 5-4 decision, the Court said that the provision overseeing CFPB’s leadership structure was unconstitutional and violated the separation of powers clause.
Sen. Elizabeth Warren (D-Mass.), who served as the CFPB’s first Special Advisor, proposed the agency as a watchdog to regulate consumer financial markets such as home mortgages, student loans and credit cards in the wake of the 2008 economic recession.
California-based debt relief services law firm Seila Law LLC brought the original complaint after objecting to the CFPB investigating its business practices and charged that the agency’s leadership structure was unconstitutional because it violated the separation of powers doctrine of the Constitution, vesting executive power in a single individual who can only be removed by the president for reasons of inefficiency, neglect of duty or malfeasance.
In his majority opinion, Chief Justice John Roberts sided with Seila Law. “The CFPB’s structure has no foothold in history or tradition,” he wrote.
“The CFPB’s single-Director configuration 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 any single individual,” Roberts wrote.
The CFPB’s single-Director structure also contravenes [separation of powers] “by vesting significant governmental power in the hands of a single individual who is neither elected by the people nor meaningfully controlled (through the threat of removal) by someone who is,” he said.
The court, however, rejected the argument that if the leadership structure was determined to be unconstitutional, the rest of the act creating the CFPB should be as well.
The provisions regarding the removal of the director can be separated from the rest of the Dodd-Frank Act, allowing the CFPB to operate without the removal restrictions, the court said. Roberts even noted that “the Dodd-Frank Act contains a provision that specifically provides that if any part of the law is struck down as unconstitutional, the rest of the law should survive,” according to SCOTUSblog. “The CFPB can therefore continue to operate, Roberts concluded, ‘but its Director, in light of our decision, must be removable by the President’ for any reason,” the blog said.