Supreme Court Allows Consumer Watchdog Agency to Stand, Strikes Down Internal Structure

Supreme Court gives president more consumer agency control

The CFPB survives, however, because Roberts said the removal protection for the CFPB director can be severed from the rest of the law creating the agency. Lawmakers, attempting to give the bureau a buffer from political influence, said the director could only be removed by the president for "inefficiency, neglect of duty, or malfeasance in office".

Trump's administration and the current CFPB leadership agreed with the challengers in the case, although administration lawyers stopped short of arguing that the entire agency should be struck down. 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. Kathy Kraninger, named by Trump to head the agency, took office in 2018 over the objections of Democrats and consumer advocates. "I respectfully dissent", wrote Justice Elena Kagan who was joined by Justices Sonia Sotomayor, Ruth Bader Ginsburg and Stephen Breyer.

The justices ruled in favour of California-based law firm Seila Law LLC, which challenged the agency's structure after being investigated by it. In organizing the CFPB, "Congress deviated from the structure of almost every other independent administrative agency in our history", Roberts wrote.

Monday's Supreme Court decision is the first chink in the independent armor of those agencies since 1933 when President Franklin Roosevelt tried to fire William Humphrey, one of five commissioners on the Federal Trade Commission.

But the Supreme Court's conservative justices have insisted in the past that the president's executive power means he may remove top officials for any reason.

"We will continue with our important mission of protecting consumers with no question that we are fully accountable to the president", she said in a statement.

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The CFPB is a signature achievement of Obama and Warren, a former 2020 Democratic candidate for president. "The CFPB is here to stay". Also in the CFPB's sights: bill collectors, telemarketers, and others accused of misleading consumers.

The law firm, which specialises in resolving consumer debt issues, sued in response to a 2017 CFPB request for information and documents during an investigation into whether it had violated federal consumer financial law.

In the lower courts, Seila lost and appealed to the Supreme Court, backed by the Trump administration.

Consumer agency survives SCOTUS challenge...

The Supreme Court found that because the CFPB director, unlike the typical federal official, isn't accountable to-that is, can not be fired by-the elected president of the United States who appointed the person, the agency's structure violates the separation of powers doctrine.

In defending the agency's structure, Clement noted that there is nothing in the Constitution about the president's power to remove officers who have been confirmed by the Senate.

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