The Consumer Financial Protection Bureau yesterday admitted that its leadership structure is unconstitutional, agreeing with a law firm suing the agency that the Supreme Court should hear arguments on the topic.
A copy of the brief, filed by the Department of Justice on behalf of the CFPB, in the case of Seila Law LLC v. CFPB can be accessed by clicking here.
Seila Law LLC — is fighting against having to comply with a Civil Investigative Demand that it received from the CFPB in regards to possible violations of the Telemarketing Sales Rule while selling debt relief services to consumers. The CFPB issued a CID seeking answers to seven interrogatories and four requests for documents. The defendant refused to provide the information, leading the CFPB to file a petition with a District Court, which sided with the regulator. Seila Law appealed that ruling to the Ninth Circuit, which also sided with the CFPB. Seila then appealed the ruling to the Supreme Court.
Separately, Kathy Kraninger, the director of the CFPB, wrote letters to Rep. Nancy Pelosi [D-Calif.], the Speaker of the House, and Sen. Mitch McConnell [R-Ky.] the Senate Majority Leader, acknowledging the acceptance of the long-held argument that only being able to remove the director of the CFPB for cause gives the director too much power.
“I have decided that the Bureau should adopt the Department of Justice’s view that the for-cause removal provision is unconstitutional,” Kraninger wrote, according to a published report. “A Supreme Court decision holding that the for-cause removal provision is unconstitutional should not affect the Bureau’s ability to carry out its important mission.”
In making its argument that the Supreme Court should hear arguments in the case, the DOJ’s brief — written by Solicitor General Noel Francisco — invoked arguments from then-Judge, now-Justice Brett Kavanaugh, who somewhat famously dissented when the Court of Appeals for the District of Columbia heard arguments in PHH v. CFPB and ruled the CFPB’s leadership structure was not unconstitutional.
“Because the CFPB is an independent agency headed by a single Director and not by a multi-member commission, the Director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. Government,” Judge Kavanaugh wrote at the time. “Indeed, other than the President, the Director enjoys more unilateral authority than any other official in any of the three branches of the U.S. Government.”
As well, the brief argues that a multi-member commission structure, similar to the Federal Trade Commission and Federal Communications Commission, with staggered terms, is less risky than letting one person run the show.
“Unlike a multi-headed commission, which generally must engage in at least some degree of deliberation and collaboration, a single Director can decisively implement his own views and exercise discretion without those structural constraints,” the DOJ wrote in its brief. “As noted, it is for such reasons that the Framers adopted a strong, unitary Executive—headed by the President—rather than a weak, divided one. Vesting such power in a single person not answerable to the President represents a stark departure from the Constitution’s framework.”
