Court sets March 3 hearing for arguments over bureau structure, constitutionality

The future of the federal consumer financial protection agency will be at the forefront at a March 3 hearing by the Supreme Court of a case questioning the agency’s constitutionality.

The high court will hear oral arguments in the case Seila Law v. Consumer Financial Protection Bureau (CFPB), which focuses on the structure of the agency. Under a provision in the law creating the bureau (the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act [Dodd-Frank]), the agency’s director may only be removed by the president for cause. The case challenges the constitutionality of that provision.

The March 3 hearing will also consider whether, if the structure provision is found to be unconstitutional, that provision can be severed from Dodd-Frank.

In May 2019, the 9th U.S. Circuit Court of Appeals in San Francisco upheld the CFPB structure, stating the agency’s structure is constitutional under Supreme Court precedent that has upheld the structure of the Federal Trade Commission. The FTC’s commissioners also are removable only for cause.

In September of this year, the CFPB itself said it would no longer defend a provision in the Consumer Financial Protection Act limiting the president’s ability to remove the director for cause. But, Director Kathleen Kraninger said in a speech at that time, “that does not mean the Bureau will stop its work.”