Supreme Court Gives President More Control Over Office of Consumer Financial Protection


Court President John Roberts strikes a key piece of Obama’s legacy.

The Supreme Court struck the Consumer Financial Protection Bureau on Monday as conceived by President Barack Obama and Senator Elizabeth Warren, facilitating the removal of the agency’s leader for any reason.

In a 5-4 opinion drafted by Chief Justice John Roberts, the court struck down part of the law that established a CFPB director who could only be fired for “inefficiency, negligence in office, or misappropriation of office.”

Proponents of the provision said the rules ensured the surveillance agency’s independence, keeping it isolated from politics with a leader who does not respond directly to the White House and can only be removed for cause.

But Roberts writes that the agency’s director “must be removable by the president at will.”

“The CFPB Director has no bosses, peers, or voters to report to. However, the Director exercises vast authority in regulation, enforcement, and adjudication over a significant portion of the United States economy, “he says.

“Such an agency lacks a foundation in historical practice and collides with the constitutional structure by concentrating power on a unilateral actor isolated from presidential control,” concluded Roberts.

A handful of other federal agencies, including the Social Security Administration, have leaders who can only be removed for cause.

Roberts joined the other four conservatives in the court to remove the rules, but the court was more fractured on whether that means the entire agency has to leave. Justices Samuel Alito and Brett Kavanaugh teamed up with Roberts and liberal judges to conclude that restrictions involving the director could be lifted.

While the decision does not affect the current CFPB director, who was appointed by President Donald Trump in 2018, it reinforces the president’s ability to exercise control over the agency.

“Today’s decision erases a feature of that agency that its creators considered fundamental to its mission: a measure of independence from political pressure. I respectfully dissent,” wrote Judge Elena Kagan, who was joined by judges Sonia Sotomayor, Ruth Bader Ginsburg and Stephen Breyer. .

The CFPB was created by Congress after the 2008 financial crisis to strengthen supervision and protect consumers. All Americans who have credit cards, mortgages, or investments with America’s top financial institutions have a stake in the CFPB and its Wall Street regulation.

“This is a case where Congress loses some power, and the President scores a point in the separation of powers game. But that game is not completely over, “said Cary Coglianese, a professor of constitutional law at the University of Pennsylvania.

“The Tribunal may well be on the way to eliminating the independence of major federal agencies, such as the Federal Reserve, the Federal Communications Commission, and other agencies headed by multiple members or commissioners who are protected from impeachment at the will of the President.” Coglianese added.

Consumer advocates warned that the decision will effectively undermine the independence of the regulator, which was created in the wake of the 2008 financial crisis.

“The Court’s ruling eliminates the independence of the Office through the creation of a Director at will, further exacerbating the political influence that has already plagued the Office,” said President and CEO of Consumer Bankers Association Richard Hunt. “This result subjects consumers and the financial services industry to potentially radical regulatory changes with each administration.”

The CFPB is a distinctive achievement of Obama and Warren, a former Democratic nominee for President of 2020. Both have passionately argued in their defense.

“Let’s not lose sight of the big picture,” Warren tweeted about the decision. “After years of attacks on industry and opposition from the Republican Party, a conservative Supreme Court recognized what we all knew: the CFPB itself and the law that created it is constitutional. The CFPB is here to stay. “

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