Supreme Court Gives President Power To Fire Key Independent Agency Chief

Supreme Court Gives President Power To Fire Key Independent Agency Chief

"Instead of placing the agency under the leadership of a board with multiple members, Congress provided that the CFPB would be led by a single director, who serves for a longer term than the president and can not be removed by the president except for inefficiency, neglect or malfeasance".

Seila, which brought one of several similar legal challenges to the agency, lost in lower courts and appealed to the Supreme Court.

But the court, in an opinion by Chief Justice John Roberts, said the setup meant the CFPB's director was unaccountable to the executive branch, creating an unconstitutional diminishment of presidential power. Justices Samuel Alito and Brett Kavanaugh joined Roberts and the liberal justices in concluding the restrictions involving the director could be severed. If former Vice President Joe Biden is elected as president, he would be free to fire Kraninger and replace her. The ruling, which gives a sitting president the ability to fire a CFPB director without cause, has far-reaching implications for other independent agencies with single-director structures such as the Federal Housing Finance Agency.

Under the Dodd-Frank Act that created the agency in response to the 2008 financial crisis, the CFPB's director is appointed by the president and confirmed by the Senate to a five-year term. The issue came up in 2017 when President Trump took office and Obama's CFPB director was still in place.

The Trump administration declined to defend the CFPB and agreed with legal challengers who argued its structure was unlawful, abandoning the legal position of the Obama administration.


"We hold that the CFPB's leadership by a single individual removable only for inefficiency, neglect, or malfeasance violates the separation of powers", Roberts wrote.

Defenders of the provision said the rules ensured independence of the watchdog agency, keeping it insulated from politics with a leader not directly answerable to the White House and only removable for cause. Justice Elena Kagan filed an opinion concurring in the judgment but dissenting with respect to aspects of the opinion.

"Today's decision wipes out a feature of that agency its creators thought fundamental to its mission - a measure of independence from political pressure". In organizing the CFPB, "Congress deviated from the structure of almost every other independent administrative agency in our history", Roberts wrote. The director of that agency still works for the American people. Not the banking industry.

The Supreme Court in 1935 ruled unanimously that the president could not dismiss FTC commissioners the way he could his own Cabinet or other members of his administration.

In the wake of the destruction caused by the last financial crisis, Congress created an independent cop on the beat focused exclusively on protecting consumers in the financial marketplace.

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