Supreme Court to Review Case on Constitutionality of CFPB

The Supreme Court announced it will hear a case regarding the constitutionality of the Consumer Financial Protection Bureau.

The case the Supreme Court will hear was brought by California-based Seila Law in which it is alleged the single director structure of the agency gives that person too much power in violation of the Constitution’s separation of powers. Directors are appointed for five-year terms. Interestingly, the CFPB itself as well as the Justice Department have previously stated they do not support the structure of the Bureau.

While other agencies also single directors, the language in the Dodd-Frank Act that created the Bureau a decade ago says the CFPB director may only be removed by the president “for inefficiency, neglect of duty, or malfeasance in office.” Seila Law has argued the CFPB’s broad law enforcement powers make that independence unconstitutional.

The Supreme Court said it will decide whether the Bureau can remain even if its structure is found to be unconstitutional. The highest court might find the Bureau is constitutional but the single director structure must change.

“CUNA has consistently advocated for legislation that provides for a multi-person, bipartisan commission to lead the Bureau, as was originally proposed by the Obama administration in 2009,” said CUNA’s chief advocacy officer, Ryan Donovan. “A commission is better for consumers because it would enhance the independence of the Bureau, bring diverse perspectives to the policymaking table, ensure greater stability, and be more consistent with our country’s democratic principles. We thank the Supreme Court for agreeing to consider the constitutionality of the CFPB’s current structure and intend to represent credit unions’ views before the court.”