The U.S. Supreme Court on Monday handed President Donald Trump more authority over a federal agency charged with protecting consumers in the financial sector, empowering him to fire its director at will and ruling that the structure it was given by Congress violated the U.S. Constitution.
"Instead of placing the agency under the leadership of a board with multiple members, Congress provided that the CFPB would be led by a single director, who serves for a longer term than the president and can not be removed by the president except for inefficiency, neglect or malfeasance". When Trump took office, his DOJ took a stance against the CFPB, arguing the President should be able to remove the director at-will.
But the court, in an opinion by Chief Justice John Roberts, said the setup meant the CFPB's director was unaccountable to the executive branch, creating an unconstitutional diminishment of presidential power.
The court's five conservative justices agreed that restrictions Congress imposed on when the president can fire the agency's director violated the Constitution.
At oral argument, Justice Ruth Bader Ginsburg said the question before the court had an "academic quality" to it. That structure could leave a new president with a director chosen by the previous president for some or all of the new president's time in office.
"The CFPB's single-director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual accountable to no one", the chief justice wrote. (Spoiler alert: "about the latter, nothing at all.) The majority offers the civics class version of separation of powers-call it the Schoolhouse Rock definition of the phrase", she said, referencing the educational, animated short films. "I respectfully dissent", Kagan wrote.
Democrats have long defended the 9-year-old agency, brainchild of U.S. Sen.
Sen. Elizabeth Warren (D-Mass.) speaks during a protest in front of the Consumer Financial Protection Bureau headquarters in Washington on November 28, 2017. As reflected in our amicus brief and our work, Americans for Financial Reform Education Fund and the broader community focused on consumer financial protection, including consumer advocates, civil rights organizations, and grassroots groups, have been committed to the CFPB's independence from the beginning because we believe that an independent regulator more insulated from political pressures will lead to the best outcomes for consumers. "Nothing in the Supreme Court ruling changes that", Warren wrote.
The case is Seila Law v. Consumer Financial Protection Bureau.