But critics — including the Trump administration, current director Kathleen Kraninger
, as well as a law firm fighting a CFPB-led investigation — argue in court briefs that a restriction on the President’s authority to remove the director at will, including over policy disagreements, “violates the Constitution’s separation of powers.”
In a move that could prove critical, the court also said it will entertain the question of whether the provision of the Dodd-Frank Act that created the bureau should also be struck.
That move “radically ratchets up the stakes of what was already a high-stakes separation-of-powers dispute,” said Steve Vladeck, CNN Supreme Court analyst and professor at the University of Texas School of Law.
“Now, if a majority of the Court holds that Congress can’t create an independent executive branch agency like the CFPB with only a single director, it may also go further and invalidate the entire statute — which could not only wipe the CFPB off the books, but undo hundreds of regulatory and oversight reforms Congress enacted in response to the financial crisis at the end of the last decade,” Vladeck said.
The case comes as some conservatives seek to diminish the power of agencies, arguing they are unaccountable to the public and disrupt the separation of powers. Supporters of the CFPB say the bureau needs independence and discretion to protect the consumer. They fear a ruling against the CFPB could impact other agencies.
Solicitor General Noel Francisco argued in court briefs that the President needs to be able to hire and fire using his executive authority.
“If any power whatsoever is in its nature Executive, it is the power of appointing, overseeing and controlling those who execute the laws,” Francisco wrote.
Justice Brett Kavanaugh, when he served on the US Court of Appeals for the District of Columbia Circuit, wrote an opinion in a similar case holding that the restriction on the removal of the director was invalid, but concluded, like Francisco has argued, that the agency could continue with a different structure.
The challenge is brought by Seila Law, a firm with a client who is currently involved in a CFPB investigation. The law firm argues that its client should not turn over documents and information to the agency because it is unconstitutionally structured.
Lawyer Kannon K. Shanmugam, representing the firm, urged the justices to take up the case to address the leadership structure where, he argued, “the director enjoys more unilateral authority than any other official in any of the three branches of the US government.”
The “director alone” makes critical decisions including how to enforce the law and what sanctions and penalties to impose on violators,” he argued, adding that the issue “casts a cloud over every action the agency takes.”
This story is breaking and will be updated.