US High Court Considers CFPB’s Fate

High Court Considers CFPB's Fate

The Supreme Court heard arguments about whether a sitting U.S. president has the authority to fire the leader of the Consumer Financial Protection Bureau (CFPB), which was formed after the financial crisis, according to the Financial Times.

The court listened to how the organization is structured, and however the justices vote will likely have a bearing on the power of presidents to fire the heads of government agencies in the future.

The CFPB was founded in 2010. Presidents have the authority to fire appointees, but some agencies, like the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC) and the Federal Reserve have complicated multi-member leaders structures that aren’t as easy to remove.

There is a provision in the Dodd-Frank Act, which created the groundwork for the agency, that says the agency’s director can only be fired for cause. On Tuesday (March 3), the Justice Department argued that the president should have the authority to fire the chief if he wants to.

There was no clear show of how the court would eventually rule, but there did seem to be a lean toward removing the restrictions for firing the head of the agency.

Justice Brett Kavanaugh said the CFPB chief serves five years, and the new president should be able to fire a director they didn’t appoint to the position.

“It’s really the next president who’s going to face the issue,” he said, adding that an incoming president and a CFPB director could have “a completely different conception of consumer financial regulatory issues.”

“How do we deal with that real-world consequence that seems different and troubling?” he said about the potential conflict between the president’s cabinet and the CFPB.

Kavanaugh has previously said the structure to the CFPB is unconstitutional.

Justice Elena Kagan said the CFPB has a structure that was similar to the Social Security office.

“So, I don’t think this is so unprecedented as you claim,” she told Kannon Shanmugan, the lawyer representing Seila Law, which was under investigation by the CFPB and brought the challenge all the way to the Supreme Court.