WASHINGTON (CN) — Stacking the lawmakers’ vision against executive authority, the Supreme Court’s conservative majority appeared ready Tuesday to give the president more power over the Consumer Financial Protection Bureau.
Just how far the court's ruling might go remained unclear after more than an hour of arguments this morning, with some justices charting a course to rule on procedural grounds, sidestepping the case’s core constitutional question.
Congress created the CFPB in response to the 2008 financial crisis, giving the agency regulatory over a financial products like mortgages and student loans. Originally the brainchild of then-Harvard Law professor Elizabeth Warren, the CFPB is an independent agency with a director who serves five-year terms and can be only fired "for inefficiency, neglect of duty, or malfeasance in office."
It was those words, known as a for-cause removal provision, the justices scrutinized Tuesday as they attempted to determine whether they constitute an undue restriction on the president's constitutional prerogatives.
The more liberal wing of the court was more accepting of arguments that Congress has significant room to limit the president's removal authority, with Justice Ruth Bader Ginsburg saying the for-cause removal restriction is a "modest" one meant to prevent the president from simply installing someone who is loyal as the head of an agency meant to act in the best interest of consumers.
"You talked about liberty," Ginsburg said. "Now whose liberty are we speaking of? What about the consumers? I mean, Congress passed this law so that the consumers would be better protected against financial fraud. And you're talking about, I suppose the liberty of your client. But what about the people that Congress was concerned about, that is, the consumers who were not well protected by the array of agencies that were handling these problems?"
But more conservative justices saw the CFPB's structure, including the five-year term, as fundamentally limiting the president's ability to control the policy of his or her administration.
"It's really the next president who's going to face the issue, because the head of this agency will go at least three or four years into the next president's term, and the next president might have a completely different conception of consumer financial regulatory issues yet will be able to do nothing about it," Justice Brett Kavanaugh said, noting the current CFPB head will serve through 2023.
Leading the latest fight against the CFPB is Seila Law, a California-based debt-relief law firm that raised the constitutional argument while fighting an investigative request from the agency.
While for-cause removal provisions are common in independent agencies through the federal government, such agencies are typically led by a multimember commission, rather than by one person. Arguing for Seila Law on Tuesday, Kannon Shanmugam said the power given to the CFPB's director, coupled with the for-cause removal provision, is virtually unprecedented and a threat to the separation of powers and individual liberty.
"Never before in American history has Congress given so much executive power to a single individual who does not answer to the president," Shanmugam said. "By significantly limiting the president's ability to remove the CFPB's director, Congress violated the core presidential prerogatives to exercise the executive power and to take care that the laws be faithfully executed.”
