Supreme Court Agrees to Review Constitutionality of CFPB

The U.S. Supreme Court recently agreed to review Seila Law v. Consumer Financial Protection Bureau (CFPB), a case that centers on the constitutionality of the CFPB.

The dispute originated when Seila Law, a law firm, refused to turn over documents to the CFPB when requested during an enforcement action. The defendant argued that the CFPB was unconstitutional because the CFPB’s director could only be fireable for cause (as opposed to at-will), which violates the Constitution’s separation of powers. The Ninth Circuit Court of Appeals disagreed, ruling that “the CFPB’s structure is constitutionally permissible.”

In taking up the case, the Supreme Court is asking the parties to focus on two issues. First, is the fireable for cause provision of the CFPB unconstitutional. Secondly, if the Supreme Court finds the CFPB unconstitutional, can that fireable for cause provision “be severed from the Dodd-Frank Act?” 

Some commentators have argued that the CFPB should be led by a commission of individuals, rather than a single director, although this does not appear to be an issue the Supreme Court will entertain during this particular case.