Consumer Financial Protection Bureau

Supreme Court Weakens the Independence of the CFPB in Seila Law LLC V The Consumer Financial Protection Bureau Decision

Washington, D.C. – Today, the Supreme Court issued its decision in Seila Law LLC v The Consumer Financial Protection Bureau. The Court found that the removal-for-cause protection of the Dodd-Frank Wall Street Reform and Consumer Protection Act was unconstitutional; a provision that protects the director from removal other than for “inefficiency, neglect of duty or malfeasance in office.” In the 5-4 decision, the Court found that this provision could be separated from the remainder of the Dodd-Frank Act, meaning that the rest of the CFPB will remain unaffected.

“Today’s decision by the Supreme Court is troublesome for the independence of the CFPB,” said Rachel Weintraub, Legislative Director and General Counsel with Consumer Federation of America. “Created in the wake of the 2008 financial crisis, the CFPB was designed to be an independent agency that could consistently and vigorously focus on consumer financial protections. While today’s decision leaves the CFPB largely intact, eliminating the removal-for-cause protection may make directors hesitant to act independently of the administration, which does not serve consumers.”

“This decision weakens the CFPB Director’s independence; an unfortunate move given that the Director should not be considering political priorities when enacting regulations, bringing enforcement actions, or holding financial institutions accountable,” said Rachel Gittleman, Financial Services Outreach Manager for CFA.

 Along with other consumer organizations, CFA filed an amicus brief in the Seila Law LLC v. Consumer Financial Protection Bureau case.  In the wake of the 2008 financial crisis, Congress passed the Dodd Frank Act, which established the CFPB as an independent agency tasked with ensuring “that existing consumer protection laws and regulations are comprehensive, fair, and vigorously enforced.” The Supreme Court has long upheld legislation that confers protection from at-will presidential removal on commissioners of the Federal Trade Commission, whose authority is similar to that of the CFPB.

“The CFPB survives this decision intact, but the important consumer watchdog has lost a crucial aspect of their independence. We hope that current and future CFPB directors will resist external and political pressures when executing their job to protect consumers in the financial marketplace,” continued Gittleman.

Contact: Rachel Weintraub, 202-939-1012