The Supreme Court will consider a case that could fundamentally alter the Consumer Financial Protection Bureau's structure and level of independence.
At issue is whether the president of the United States can remove the head of the agency at will, a provision lawmakers decided against in the Dodd-Frank Act in order to insulate the bureau from political pressures.
The plaintiff in the case, Seila Law LLC, gained the support in September of the Department of Justice and CFPB Director Kathleen Kraninger, who agreed that a president should be able to fire a director, citing the separation of powers clause, which gives a president the authority to remove a head of an agency at will.
The brief filed by the DOJ in connection with the Seila Law case argues that the insulated nature of the bureau is unlawful because the agency is ultimately not accountable to the executive branch, given that the president cannot fire a director. A lower court ruled in 2018 that the bureau's leadership structure is constitutional because other independent agencies, such as the Federal Trade Commission, are similarly structured.
Kraninger's stance on the constitutionality of the CFPB drew ire from Democratic lawmakers at a pair of hearings before the House and Senate financial services committees earlier this week.
The director told a House panel that the constitutional question has "delayed many enforcement actions, it has delayed regulatory actions, and has been something I believe, fundamentally, that the Supreme Court and Congress need to decide and settle once and for all ... ."
Consumer Bankers Association President and CEO Richard Hunt wrote in a statement that "a sole-director calling all the shots will never provide the long-term stability consumers deserve and the well-regulated financial sector needs."