Supreme Court to Hear Case About CFPB

Seila Law was under investigation by the CFPB for violations of telemarketing laws. The CFPB requested documents pertaining to call from Seila, but the firm refused, arguing that the structure of the CPB is unconstitutional because the head of the CFPB can only be removed by the President “for cause”. (Meaning there can’t be change due to political whims; the director must have done something actually wrong.)

The US Court of Appeals for the 9th Circuit determined that such a restriction does not  “impede the President’s ability to perform his constitutional duty to ensure that the laws are faithfully executed.”

Seila appealed to the US Supreme Court in June 2019, and the court has agreed to take the case.  At first glance, this is an issue of whether the head of an agency designed to be apolitical and not subject to the whims of the moment can be protected from being removed without cause. Also at stake, however, is the entirety of the Dodd-Frank Act. If the court decides that one portion of the Act is unconstitutional, can that one part be separated from the rest of the Act, or does that wipe out the whole of Dodd-Frank?

Arguments will be held starting in 2020.

It is with noting that the U.S. Court of Appeals for the District of Columbia Circuit rejected a similar challenge in 2018, pointing out that in 1935  the US Supreme Court determined that the structure of the Federal Trade Commission was constitutional, and the CFPB is another regulatory agency structured on the same model.  (Brett Kavanaugh was a dissenting vote in that case. )


More Information:

Justices to review constitutionality of CFPB structure (SCOTUS Blog, 18 Oct 2019)

Supreme Court will hear challenge to Consumer Financial Protection Bureau (CNBC, 18 Oct 2019)

PHH Corp. v. CFPB, No. 15-1177 (D.C. Cir. 2016) (Decision dated 31 Jan 2018)


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