High Court makes it easier for president to remove CFPB head

Ross Houston
June 29, 2020

"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".

Roberts was joined by the court's four other conservatives in striking down the rules, but the court was more fractured on whether it means the entire agency has to go.

"The CFPB director has no boss, peers or voters to report to", Chief Justice John Roberts wrote.

The decision should have no immediate impact at the agency, because the current director, Kathy Kraninger, was appointed by President Trump in 2018. When Trump took office, his DOJ took a stance against the CFPB, arguing the President should be able to remove the director at-will.


"The CFPB's single-Director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual who is neither elected by the people nor meaningfully controlled (through the threat of removal) by someone who is", Roberts wrote.

It is headed by a single director who is nominated by the president and confirmed by the Senate for a five-year term. The Trump administration had argued that the restrictions improperly limit the power of the president.

Defenders of the provision said the rules ensured independence of the watchdog agency, keeping it insulated from politics with a leader not directly answerable to the White House and only removable for cause.

As Justice Elena Kagan wrote in a dissent, "Today's decision wipes out a feature of that agency its creators thought fundamental to its mission - a measure of independence from political pressure".


The bureau, the brainchild of former Democratic presidential candidate Elizabeth Warren, has been politically polarizing, with Democrats citing a need to combat financial-industry excesses and Republicans warning of runaway government regulation.

But Warren said in a series of tweets in the wake of the Supreme Court's ruling that the "CFPB is here to stay".

As lawyer Paul Clement who defended the structure of the CFPB in court put it earlier this year, "The issue in this case is like the thread on the sweater that if you start tugging on it, and you tug on it hard enough, the whole sweater comes undone", and the sweater in this case, he said, is "the entirety of the independent agencies, the whole alphabet soup of agencies". Not the banking industry.

The case is Seila Law v. Consumer Financial Protection Bureau.


Although the removal-for-cause protection applies to other agencies, such as the Securities and Exchange Commission and the Federal Reserve Board, they have multiple-member boards, rather than a single director. "Nothing in the Supreme Court ruling changes that", she said.

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