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Supreme Court Decision To Take Up CFPB Could Threaten Agency Independence

Friday, October 18, 2019
Yvette Garcia Missri

WASHINGTON, D.C. – The U.S. Supreme Court said today that it will take up Seila Law LLC v. Consumer Financial Protection Bureau (CFPB), a case attempting to undermine the independence of the nation’s consumer protection watchdog.  Seila Law LCC is pushing the Supreme Court to give President Trump influence and control over how the CFPB oversees the financial services industry.

Specifically, the lawsuit contends that the structure of the CFPB is unconstitutional because it only allows the President to remove the CFPB Director for-cause. Congress, however, established the independent CFPB to prevent the President from removing the CFPB Director for political reasons. Ruling to undermine the CFPB’s independence by allowing a President to fire the CFPB Director at-will puts seniors, veterans, students, and every consumer across the country at risk from being abused by bad financial actors, such as predatory payday lenders.

In September, CFPB Director Kathy Kraninger—who was appointed by President Trump in 2018—announced that the CFPB would no longer defend the constitutionality of its Director’s for-cause removal provision. Together with the U.S. Department of Justice, Director Kraninger asked the Court to consider an appeal that would allow the president to remove the CFPB director at-will instead of for-cause.

A decision on Seila Law LLC v. CFPB is expected next spring or early summer.

Center for Responsible Lending Litigation Counsel Yvette Garcia Missri released the following statement:

If the Supreme Court invalidates the CFPB director's for-cause removal protection, it would imperil the agency’s ability to function as intended, and it would allow free reign for bad financial actors to influence the agency. We’ve already seen payday lenders successfully push their plan to delay and weaken the payday rule, and restitution for consumer victims wronged by industry has significantly declined under the agency’s current political leadership.

Congress intentionally created the current structure so that the consumer bureau could make independent and unbiased decisions to protect consumers—even when those decisions are opposed by intense lobbying. The CFPB has been highly effective in responding to unlawful, abusive practices within the financial services industry. Its effectiveness and ability to respond to unlawful practices quickly, is attributable in part to its leadership by a single director and its insulation from political influence and industry capture.

With Director Kraninger’s decision not to protect the CFPB’s independence, we urge the Supreme Court to appoint an amicus curiae that will defend the constitutionality of the CFPB and ensure the agency continues to protect all consumers.

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Press Contact: ricardo.quinto@responsiblelending.org