A New Constitutional Challenge to the Consumer Financial Protection Bureau

Sep 13, 2018 | News

State National Bank of Big Spring alongside two non-profit organizations recently filed a petition for certiorari – a request for the Supreme Court to hear a case – that challenges the constitutionality of the Consumer Financial Protection Bureau (CFPB). Although the Supreme Court denies the vast majority of petitions, it may be more likely to hear this case if the Senate confirms Brett Kavanaugh to the Supreme Court, who has ruled against the constitutionality of the CFPB while a judge on the D.C. Court of Appeals.

The petition for certiorari questions whether the CFPB violates the U.S. Constitution’s separation of powers by having a single director that “the President cannot remove from office for policy reasons, is exempted from Congress’s power of the purse and accompanying congressional oversight, and has no internal checks or balances … to mitigate this lack of accountability and restraint.” The petition also asks the Supreme Court to decide whether the Appropriations Clause “permits Congress to create perpetual, ondemand funding streams for executive agencies that are unreviewably drawn from the coffers of other independent agencies.”

These issues mirror much of Kavanaugh’s previous rulings. Unlike the CFPB, “the heads of executive agencies are accountable to and checked by the President; and the heads of independent agencies, although not accountable to or checked by the President, are at least accountable to and checked by their fellow commissioners or board members,” Kavanaugh wrote in a 2018 dissenting opinion. “No independent agency exercising substantial executive authority has ever been headed by a single person…Until now.”

This particular petition for certiorari might also catch the attention of the Supreme Court due to inconsistent rulings in lower courts. In January 2018 for example, the D.C. Circuit in PHH Corp. v. CFPB found, in a split ruling, that CFPB’s structure was constitutional. Six months later, U.S. District Judge Loretta A. Preska in CFPB and The People of the State of New York v. RD Legal Funding ruled that the CFPB’s “composition violates the Constitution’s separation of powers.”

The Senate Judiciary Committee is expected to hold a vote for Kavanaugh in late September. During Kavanaugh’s hearings, Senate Judiciary Chairman Chuck Grassley expressed his hope that the Senate could confirm Kavanaugh to the Supreme Court before it begins its next session on October 1.

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