SCOTUS Rules that President Can Remove CFPB Director at Will, But Bureau Can Remain

Jun 29, 2020Federal Regulation, Litigation, News

This morning, the Supreme Court issued its long-awaited decision in Seila Law LLC v. CFPB, ruling that the Consumer Financial Protection Bureau can remain in place, although the President has authority to fire its Director without restraint. Though this will impact the Bureau’s independence, the decision ultimately preserves the CFPB’s structure by terminating the removal clause from the 2010 law that created the agency.

The 2010 Dodd-Frank legislation mandated that the single-director could only be removed for “inefficiency, neglect of duty of malfeasance in office,” a clause intended to protect the bureau from political interference.

Current CFPB Director Kathy Kraninger supported the decision. “Today’s Supreme Court decision finally brings certainty to the operations of the Bureau. Consumers and market participants should understand that the same rules continue to govern the consumer financial marketplace,” she tweeted, according to a Politico article highlighting the decision.

All five of the Court’s conservative justices supported the decision to eliminate restrictions on the removal of the CFPB’s Director, as many have consistently sought to replace the bureau’s single-director structure with a bipartisan commission.

“A decade ago, we declined to extend Congress’s authority to limit the President’s removal power to a new situation, never before confronted by the Court,” Chief Justice John Roberts wrote in the majority opinion. “We do the same today. In our constitutional system, the executive power generally includes the ability to supervise and remove the agents who wield executive power in his stead. While we have previously upheld limits on the President’s removal authority in certain contexts, we decline to do so when it comes to principal officers who, acting alone, wield significant executive power. The Constitution requires that such officials remain dependent on the President, who in turn is accountable to the people.” 

In a separate opinion, however, written by Justice Elena Kagan and joined by Justices Ginsburg, Breyer, and Sotomayor, the Justices disagreed that the Bureau’s Director should be removable without cause.

“Today’s decision wipes out a feature of that agency its creators thought fundamental to its mission—a measure of independence from political pressure,” they wrote.

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