There's good news and bad news in the Supreme Court's CFPB ruling

Daniel Fowler
June 30, 2020

"While the President has full confidence in the current director of the CFPB and believes that she has fully upheld her statutory duties, the President also believes that no official should hold such enormous powers without, at least, being directly accountable to a democratically-elected President regardless of party affiliation", White House press secretary Kayleigh McEnancy said in a statement following the ruling. Federal law had blocked the president from dismissing its director, who has to be confirmed by the U.S. Senate, before that person's five-year term lapses, unless the termination is for "inefficiency, neglect of duty, or malfeasance in office".

The CFPB was the brainchild of MA senator and former Democratic presidential candidate Elizabeth Warren.

Senator Elizabeth Warren declared victory on Monday after the Supreme Court found the governing structure of her Great Recession-era brainchild, the Consumer Financial Protection Bureau, unconstitutional ― but largely left the agency itself intact. When the agency a a sent a demand for information, the law firm refused and alleged the bureau was operating unconstitutionally. "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will".

However, the court stopped short of more sweeping action, such as weakening its enforcement abilities or even abolishing the CFPB altogether, which has been a goal of many Republicans and the banking industry.

"This fundamental textual and historical error about "all" is the basis of the "exclusivist" unitary executive argument against the congressional and Manhattan DA subpoenas for Trump's tax returns".

The Supreme Court is seen in Washington, June 15, 2020.

When it created the consumer finance watchdog agency in the wake of the 2008 financial crisis, Congress sought to protect it from political influence, but opponents argued that shielding the director from removal violated the separation of powers principle of the constitution.

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In her tweets, Warren accused the CFPB's current director, Trump appointee Kathy Kraninger, of gutting portions of the agency and urged her to "stop working for the crooks and start working for working families".

If today's ruling had gone the other way, Kraninger would maintain her position through December 2023, no matter who won this year's presidential election.

At the same time, Roberts declined to grant the petitioner's request that the entire agency be struck down.

The Supreme Court decision does not mean the agency will act differently for consumers now.

As Warren noted Monday, the agency returned $12 billion to consumers "scammed by financial institutions" under Richard Cordray, the previous director, who departed in 2017.

"Since the CFPB director can now be appointed at will, the next administration could put in someone who will stand up for consumers", Landis says. She was nominated in 2018 by President Donald Trump, replacing Acting Director Mick Mulvaney.

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