On October 18, the U.S. Supreme Court agreed to review a decision from the Ninth Circuit that affirmed the constitutionality of the structure of the Consumer Financial Protection Bureau (“CFPB”).

• The CFPB is an agency created by Congress in 2010 and charged with ensuring consumer protection in the financial industry. The agency is led by a single director, whom the President can remove only “for cause”—i.e., only “in cases of inefficiency, neglect of duty, or malfeasance in office.” The constitutionality of the CFPB’s structure has been hotly debated for years.
• In June 2017, the CFPB asked a district court to enforce a civil investigative demand that the agency had issued to a law firm earlier that year. In response, the law firm argued that the CFPB’s structure is unconstitutional because it unduly restricts presidential authority in violation of the Constitution’s separation of powers. The district court disagreed and upheld the CFPB’s existing structure.
• The Ninth Circuit affirmed the decision in May 2019, concluding that Supreme Court precedent compels the conclusion that it is “constitutionally permissible” for the CFPB’s director to have for-cause removal protection because it “does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed.”
  • The Ninth Circuit reasoned, among other things, that the CFPB acts as a financial regulator—“a role that has historically been viewed as calling for a measure of independence from Executive Branch Control”—and that it exercised both quasi-legislative and quasi-judicial powers that permit independence from the President’s will.
• In June 2019, the law firm petitioned the Supreme Court to hear the case, arguing that the CFPB’s structure is unconstitutional because it “leaves the Director to exercise the CFPB’s enormous power entirely as he chooses, without direction or supervision from the President and without any checks from a multi-member group endowed with equivalent authority.”
• A few months later, the CFPB itself joined the Department of Justice in requesting that the Supreme Court accept the law firm’s appeal and hold that the restriction on removal “impermissibly infringes the separation of powers fundamental to our constitutional structure.” Justice Kavanaugh took a similar position in a dissent issued while he was on the D.C. Circuit.
• The case is Seila Law LLC v. CFPB, No. 19-7, pending before the U.S. Supreme Court. We will continue to monitor and report on the case as it progresses.