The United States Supreme Court has granted certiorari in the matter of Seila Law LLC v. Consumer Financial Protection Bureau to address the question of whether the Consumer Financial Protection Bureau’s (CFPB) single-director structure and the President’s authority to remove the director only “for cause,” as prescribed by 12 U.S.C. § 5491(c)(3), violate the separation of powers. The Supreme Court also directed the parties to brief the question of whether, if the CFPB is found to be unconstitutional because of 12 U.S.C § 5491(c)(3), that section can be severed from Dodd-Frank Act, which established the CFPB. Interestingly, the Court did not ask the parties to brief whether striking the single-director model in favor of a multi-member commission, like the Federal Trade Commission, could save the CFPB from having to be recreated all over again if its structure is found to be unconstitutional.
Recently, CFPB Director Kathy Kraninger, who was appointed by the President following the end of Mick Mulvaney’s interim acting directorship, has publicly stated on behalf of the Administration that for-cause termination does violate the Constitution’s separation of powers. This is a complete reversal of the position that the CFPB took only a few months before Seila Law filed its petition for certiorari. In response to this new position, the U.S. House of Representatives will be filing an amicus curie brief in support of the present single-director, removal only for cause structure.
One related issue that will likely be addressed in the briefing is: If the single directorship violates the separation of powers, what does that mean for all of the supervisory, enforcement, and investigatory actions that the CFPB has taken since it began operations in 2011 and the regulations it has issued?
Already, several court cases that involve the CFPB have been stayed by judges for the express purpose of waiting to see what the Supreme Court’s decision will be and what impact it will have on those cases. However, there is no indication that the CFPB is putting any of its initiatives, supervision, or any enforcement-related actions on hiatus. Only time will tell if that was a wise decision.
We will continue to keep our readers updated on this matter.