Collector - September 2020 - 42

GOVERNMENTAFFAIRS

U.S. Supreme Court Rules in Case
Challenging Structure of CFPB
The Seila Law v. Consumer Financial Protection Bureau decision means the sitting president can now remove the
CFPB director for any reason.
By Colin Winkler

O

n June 29, the U.S. Supreme Court
issued its long-awaited opinion in
Seila Law v. Consumer Financial
Protection Bureau, holding that the CFPB's
leadership by a single individual removable
only for "inefficiency, neglect, or malfeasance"
violates the separation of powers doctrine.
In that same opinion, the court severed
the statutory restriction on the president's
ability to remove the CFPB director only for
"inefficiency, neglect, or malfeasance."
The upshot? While the CFPB remains with
us, the president will now be able remove the
director "at will," i.e., for any reason.
In theory, this change could affect the
pending amendments to Regulation F, the
"debt collection practices" rule, but for now
the CFPB remains on track to release the
final rule in October, according to its Spring
2020 rulemaking agenda released on June 30.
In a reaction to the decision, ACA
International CEO Mark Neeb said that "the
regulatory uncertainty that ACA members
now face-with the possibility of new
leadership based on the election and amidst
a major rulemaking for the industry-is
why we have led efforts in Congress to push
for a structure that provides more certainty
and accountability." Neeb added that "ACA
will continue to urge Congress to consider a

42

multi-member commission to lead the CFPB,
as opposed to a single director that can now
be removed at any time, for any reason."

THE DECISION
In finding that the removal restriction
violated the separation of powers doctrine,
Chief Justice John Roberts considered
the powers expressly reserved in the
Constitution for the executive branch:
"Article II vests the entire 'executive power'
in the President alone, but the Constitution
presumes that lesser executive officers will
assist the President in discharging his duties.
The President's executive power generally
includes the power to supervise-and, if
necessary, remove-those who exercise the
President's authority on his behalf."
The court found the structure of the CFPB
unique-and at odds with a constitutional
balance of powers. It stated: "The CFPB's singleDirector structure contravenes this carefully
calibrated system [of constitutional powers]
by vesting significant governmental power in
the hands of a single individual accountable to
no one. The Director is neither elected by the
people nor meaningfully controlled (through
the threat of removal) by someone who is. The
Director does not even depend on Congress for
annual appropriations."

In that vein, Chief Justice Roberts cited no
less than James Madison, who wrote in The
Federalist Papers (No. 58) that the "power
over the purse" represents the most complete
and effective political weapon in advancing
the interests of the people.
In examining the CFPB's structure of
a single head removable only for cause,
the court noted that it has historically
recognized only two exceptions to the
president's Article II removal power: (1)
multi-member agencies whose officers do
not wield "substantial executive power" and
may be removed by the president for "good
cause," and (2) "inferior officers" who have
"limited duties and no policymaking or
administrative authority."
A majority of the court concluded
that the director of the CFPB does not
fit into either of these exceptions. The
CFPB director can issue binding rules
and final decisions and "seek daunting
monetary penalties against private parties
on behalf of the United States." Neither
does the CFPB director qualify as an
"inferior" government officer, as she "has
the authority to bring the coercive power
of the state to bear on millions of private
citizens and businesses, imposing even
billion-dollar penalties."

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

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