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Supreme Court Set to Hear CFPB Constitutionality Case

In a scheduling order released by the Supreme Court, the Court announced that it will be hearing the case of Seila Law LLC V. Consumer Protection Bureau on March 3, 2020. The case will include arguments against the Bureau’s leadership structure, as the law firm named in the case, Seila Law, alleges that the structure of the agency grants too much power to its director.

According to American Enterprise Institute Senior Fellow Peter J. Wallison, there is more at stake than just the constitutionality of the Bureau.

On Real Clear Politics, Wallison argues that this CFPB case is an example of Congress enacting “broadly  phrased laws, essentially delegating the key legislative choices to administrative agencies and violating the Framers’ constitutional plan of separation.”

Additionally, he states that the Dodd-Frank Act is another “dangerous step.”

Seila Law alleges that the structure of the agency grants too much power to its director. According to court papers, given the CFPB’s broad law enforcement powers, the fact that the president may only remove the director of the CFPB “for inefficiency, neglect of duty, or malfeasance in office” is unconstitutional. As Wallison says, “the president has the power through the appointment and removal of executive officials to carry out the policies he was elected to pursue.” In May, the CFPB beat Seila Law before a panel of the 9th U.S. Circuit Court of Appeals.

Last year, in a split decision, a Washington appeals court reversed a previous ruling, declaring the structure of the Consumer Financial Protection Bureau to be constitutional after all. The Court of Appeals for the District of Columbia Circuit ruled in January 2018 that the CFPB's structure is constitutional and that the director of the agency can only be fired by the president for “inefficiency, neglect of duty, or malfeasance in office.”

The court's ruling read, in part, "None of the theories advanced by PHH supports its claim that the CFPB is different in kind from the other independent agencies and, in particular, traditional independent financial regulators."

CNBC reports that a decision in the case is likely by the end of June.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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