Greenspoon Marder Consumer Finance Blog: United States Supreme Court Rules President May Remove Consumer Financial Protection Bureau Director At Will

Consumer Finance Blog Jun 30, 2020

By Murray B. Silverstein, Esq. & Jacob Boehner, Esq.

On Monday, in Seila Law LLC v. Consumer Financial Protection Bureau, Case No. 19-7, the United States Supreme Court held unconstitutional the provision of the Dodd-Frank Act prohibiting removal of the Consumer Financial Protection Bureau’s (“CFPB”) Director absent his or her “inefficiency, neglect of duty or malfeasance.” The Court found that this “for cause” removal requirement rendered the CFPB, as constructed, in violation of the separation of powers doctrine “by concentrating power in a unilateral actor insulated from Presidential control.”

The Court declined to extend precedent permitting certain congressional limitations of the president’s removal power to the CFPB, emphasizing the significant power held by the CFPB’s Director, which includes the ability to promulgate binding rules relating to 19 separate consumer protection statutes ranging from student loans to mortgages to credit cards. The Supreme Court also declined to strike down the CFPB in its entirety, holding that severance of the “for cause” provision would remedy the CFPB’s constitutional flaw. As a result of the Supreme Court’s decision, the president may now remove the Director at will.

The Supreme Court’s decision diminishes the independence of the Director, who was previously afforded a five-year term absent cause for his or her removal. Going forward, for better or for worse, the president may remove the CFPB’s Director for any reason.

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Greenspoon Marder Consumer Finance Blog: United States Supreme Court Rules President May Remove Consumer Financial Protection Bureau Director At Will

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