Supreme Court to Review Constitutionality of CFPB Leadership Structure

The Supreme Court today said it would review the constitutionality of the Consumer Financial Protection Bureau’s single powerful director, who can be removed by the president only “for cause,” not at will.

The case involves a debt relief company called Seila Law, which asked the Supreme Court to hear its appeal of a 2017 civil investigative demand from the bureau. Seila Law resisted the CID on the grounds that the bureau’s structure is unconstitutional. The Ninth Circuit Court of Appeals upheld the CFPB’s structure in Seila Law, as did the full D.C. Circuit Court of Appeals in a separate 2018 ruling. Last month, CFPB Director Kathy Kraninger wrote that the bureau “has determined that the for-cause removal provision of the [Dodd-Frank Act] is unconstitutional” and that the CFPB will no longer defend its leadership structure in court.

American Bankers Association President and CEO Rob Nichols welcomed the news. “Regardless of the outcome, we continue to believe that the bureau should be more accountable to Congress and that a five-member, bipartisan commission—as originally envisioned in drafts of the Dodd-Frank Act—would balance the bureau’s needs for independence and accountability, while broadening perspectives on rulemaking and enforcement,” he said. “It would also provide long-term stability that benefits consumers, financial service providers and the economy.”