21 Lawmakers Come Out To Defend The Consumer Financial Protection Bureau

While most federal agencies will soon see a change in leadership and direction after President-elect Donald Trump takes office, the head of the Consumer Financial Protection Bureau is supposed to be shielded from such sudden changes. A recent court decision put that protection — and the future of the CFPB itself — in question, but today a group of 21 federal lawmakers, along with a coalition of consumer advocates and civil rights groups, asked the court to keep the CFPB’s structure intact.

A quick round of catch-up for those coming in late: The CFPB has only one director — currently Richard Cordray, who still has a few years left on his term — and under the law that created the Bureau, the CFPB Director can only be removed from office by the President “for cause,” meaning the Director would need to screw up really badly.

In most cases where a federal agency has only one director, the President has the authority to remove that director at will. On the other side of the coin are the agencies with multiple commissioners (and usually a chairperson) who can’t be easily removed by the President, but where no single commissioner’s vote counts more than the others.

While it is rare for an agency to have a leadership structure like the CFPB’s, it’s not unheard of. The heads of the Social Security Administration, the Federal Housing Finance Agency, and the Office of Special Counsel are each protected from removal at the whim of the President.

Even though nothing in the Constitution provides details on independent federal agencies, and no law exists requiring that an agency have either a commission that can’t be fired or single director that can, a split three-judge panel of the D.C. Circuit Court of Appeals ruled in October that the CFPB’s structure is unconstitutional.

“The independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. Government,” wrote Judge Brett Kavanaugh in the majority opinion. “They exercise enormous power over the economic and social life of the United States. Because of their massive power and the absence of Presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.”

Earlier this month, the CFPB petitioned full D.C. Circuit to rehear this case, arguing that the the Supreme Court has held that the President can “create independent agencies run by principal officers appointed by the President, whom the President may not remove at will but only for good cause,” and that the Constitution did not give the President “illimitable power of removal” over the officers of independent agencies.

If the D.C. Circuit grants the CFPB’s petition for a rehearing, it means the earlier appellate panel decision has no legal effect and Director Cordray’s position is protected pending the outcome of the full-circuit hearing.

Which brings us to today, when 21 Senators and Congresspersons filed a brief [PDF] with the appeals court, calling on the judges to rehear this case.

“[T]he panel decision fundamentally altered the CFPB and hampered its ability to function as Congress intended,” write the lawmakers. “It also called into question the constitutionality of other regulatory agencies with similar structural features… Moreover, the panel’s decision is at odds not only with the text and history of the Constitution, but also with long-standing Supreme Court precedent.”

In addition to the lawmaker’s brief, a coalition of consumer advocacy groups — including Americans for Financial Reform, Consumer Federation of America, the Center for Responsible Lending, and the National Consumer Law Center — filed a brief of their own [PDF] in defense of the CFPB’s structure.

The advocates contend that the judges in the earlier decision reached their conclusion “without even once addressing why Congress took such care to structure the CFPB as it did or how the CFPB’s design is so critical to its proper functioning… This structure allows the Bureau to make decisions that protect consumers — even when those decisions are opposed by intense lobbying.”

The lawmakers’ amicus brief was signed by Sen. Sherrod Brown (OH), Rep. Michael E. Capuano (MA), Rep. John Conyers Jr. (MI), Rep. Elijah Cummings (MD), Sen. Dick Durbin (IL), Rep. Keith Ellison (MN), Rep. Alan Grayson (FL), Rep. Al Green (TX), Rep. Stephen F. Lynch (MA), Rep. Carolyn B. Maloney (NY), Sen. Bob Menendez (NJ), Sen. Jeff Merkley (OR), Rep. Gwen Moore (WI), Rep. Nancy Pelosi (CA), Sen. Jack Reed (RI), Sen. Harry Reid (NV), Rep. Brad Sherman (CA), Sen. Elizabeth Warren (MA), Rep. Maxine Waters (CA), and former Congressmen Barney Frank (MA), and Brad Miller (NC).

The full list of groups signing the other brief: Americans for Financial Reform, California Reinvestment Coalition, the Center For Responsible Lending, Consumer Federation of America, The Leadership Conference on Civil and Human Rights, the National Community Reinvestment Coalition, the National Consumer Law Center, the National Council Of La Raza, United States Public Interest Research Group Education Fund, Inc., and Woodstock Institute.