The Democratic-led House of Representatives filed a brief late Monday night asking the Supreme Court to reject a challenge to the Consumer Financial Protection Bureau’s (CFPB) constitutionality.
The House filed a brief Monday opposing a request for the Supreme Court to take up a case from the Ninth Circuit Court of Appeals arguing that the structure of the CFPB, a powerful financial regulator, infringes on the president’s executive authority.
The Court of Appeals ruled in favor of the agency against Seila Law, a law firm that refused to comply with a CFPB request for documents related to an enforcement action.
The appeals court upheld a district court’s rejection of Seila’s argument that claimed the CFPB was unconstitutional.
Seila has since asked the Supreme Court to take up the case, but the high court did not add it to the docket for its upcoming October term. Even so, the House seeks to kill the request after the Trump administration announced last month it would not defend the CFPB’s structure before the Supreme Court.
“By not defending the Consumer Bureau’s independence, the Trump Administration is choosing special interests over America’s consumers,” said House Speaker Nancy Pelosi (D-Calif.) in a Monday statement.
The CFPB has been a consistent partisan flashpoint since it opened in 2012.
Designed by Sen. Elizabeth Warren (D-Mass.) and enacted through the 2010 Dodd-Frank Wall Street reform law, the agency was created by Democrats to police banks and lenders for fraud and abuse of their customers.
CFPB critics argued that by making the bureau’s director fireable by the president only “for cause,” which is generally considered to be severe incompetence or misconduct, Dodd-Frank illegally impeded the president’s control over the executive branch.
The U.S. Court of Appeals for the District of Columbia Circuit ruled in 2016 that the CFPB’s structure was unconstitutional. But that decision, authored by eventual Supreme Court Justice Brett Kavanaugh, was overturned by the full court in 2018.
The House brief asked the Supreme Court to abide by D.C. Circuit ruling to protect the CFPB, arguing that the president has ample authority to fire the bureau’s director if she or he is not enforcing the law.
The brief also noted that because the CFPB is controlled by a single director, the president wields significant power over the agency by choosing who leads it.
“Indeed, where an agency is headed by a single individual, the lines of Executive accountability—and Presidential control—are even more direct than in a multi-member agency,” the House argued.
“If the President determines that the CFPB Director is failing in her duty to enforce the consumer protection laws, the President can remove and replace the Director.”
The CFPB issued several sweeping regulations and pursued aggressive lawsuits under former director Richard Cordray, a Democrat. While Republican and industry critics of the CFPB failed to curb the agency, President Trump’s 2016 election cleared a path to transform the bureau.
When Cordray resigned in November 2018, Trump appointed Mick Mulvaney, then the White House budget director, to lead the bureau on an acting basis. Mulvaney was replaced in December 2018 by Kathy Kraninger, who backed the CFPB’s decision not to defend its structure before the Supreme Court.
Trump’s appointments of Kavanaugh and Neil Gorsuch to the Supreme Court have also raised fears among the CFPB’s defenders that the court could move to gut or even eliminate the bureau.
“Despite previous court rulings that made it clear that the Consumer Bureau is constitutional and here to stay, Kathy Kraninger insists on working to undermine and politicize the agency at the expense of hardworking Americans,” said Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, which oversees the CFPB.
“This is yet another example of a Trump Administration appointee working to undermine the mission of the agency they were appointed to lead.”
Kraninger is scheduled to testify next Wednesday, Oct. 16, before the Financial Services Committee.