High court ruling allowing president to fire CFPB director ‘at will’ has no impact on agency rules, Kraninger says

A Supreme Court ruling Monday that lets the federal consumer financial protection agency continue in operation – but finds that the president may remove its director at will – means that the agency’s rules continue to govern the consumer financial marketplace, the current director said.

Kathy Kraninger, the current director of the Consumer Financial Protetion Bureau (CFPB), posed on Twitter that the rule by the high court “finally brings certainty to the operations of the Bureau. We will continue with our important mission of protecting consumers with no question that we are fully accountable to the President.”

“Consumers and market participants should understand that the same rules continue to govern the consumer financial marketplace,” she added.

Monday, the court ruled 5-4 that Congress overstepped the Constitution in 2010 in creating the CFPB and placing it under the control of a single director, free from White House political direction. Congress, attempting to give the bureau a buffer from political influence, said the director could only be removed by the president for “inefficiency, neglect of duty, or malfeasance in office.”

But the court, in an opinion penned by Chief Justice John Roberts, said the agency’s director was unaccountable to the executive branch, creating an unconstitutional reduction of presidential power.

“The CFPB’s single-director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual accountable to no one,” Roberts wrote.

The court found only that the agency’s structure with a single director appointed by the president who could only be removed “for cause” was unconstitutional. It rejected broader arguments that the court should strike down the bureau altogether.

The conservative-leaning group of five justices – Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Roberts – voted in the majority. The four liberal-leaning justices – Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan – voted against the ruling, with Kagan writing the dissent.

“Today’s decision wipes out a feature of that agency its creators thought fundamental to its mission – a measure of independence from political pressure,” Kagan wrote.

The decision involved a case brought by Seila Law, a debt relief company, that the bureau is unconstitutional in that its director may only be removed by the president “for cause” and not at will. The group argued that the Supreme Court has “consistently recognized that the Constitution empowers the president to keep federal officers accountable by removing them from office.”

Last fall, 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.”

Kraninger, then, pointed to a provision in the CFPA that, should any provision of the bureau’s statute be found unconstitutional, the remainder of the act will not be affected.

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