Supreme Court: CFPB Director Must Be Removable ‘At Will’

The Supreme Court today held that the Consumer Financial Protection Bureau may continue to operate, but ruled that the bureau’s single powerful director must be able to be removed at will by the president. The court said that the current legal framework under which the director may only be removed “for cause” is unconstitutional.

In the court’s opinion, Chief Justice John Roberts noted that “the structure of the CFPB violates the separation of powers. We go on to hold that the CFPB Director’s removal protection is severable from the other statutory provisions bearing on the CFPB’s authority. The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.”

The court issued its ruling in a case involving 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.

“Today’s decision from the U.S. Supreme Court on the constitutionality of the CFPB’s leadership structure resolves important questions surrounding the Bureau’s design and its future,” said ABA President and CEO Rob Nichols. “We still believe that Congress has an opportunity to strengthen the CFPB over the long term by converting the Bureau into a five-member, bipartisan commission as envisioned in drafts of the Dodd-Frank Act. This important change would balance the Bureau’s needs for independence and accountability, while broadening perspectives on rulemaking and enforcement. It would also ensure the CFPB’s long-term stability, which would benefit consumers, financial institutions and the broader economy.”