Trump Administration Urges Court to Strike CFPB Independence

Steven D. Schwinn, University of Illinois Chicago John Marshall Law School

The Trump Administration urged the Court this week to take up a case that challenges the political independence of the head of the Consumer Financial Protection Bureau. If the Court takes the case, it would likely deal one more significant blow to agency independence--or to abolish agency independence altogether.

Congress created the CFPB as part of the Dodd-Frank Act to regulate consumer financial products and services. Under the Act, the head of the CFPB is appointed by the President, with Senate confirmation, for a five-year term and removable by the President only for "inefficiency, neglect of duty, or malfeasance in office." The removal provision is designed to ensure that the CFPB head isn't subject to the political whims of the White House.

In a brief in support of Court review this week, the administration argues that it violates the separation of powers. In particular, the administration claims that the termination provision encroaches too far into the President's authority to supervise the executive branch. It distinguishes Humphrey's Executor by arguing that, unlike the CFPB, the independent agency in that case, the FTC, involved a multi-member board with staggered appointment terms, and with quasi-legislative and quasi-judicial authority. It distinguishes Morrison v. Olson by arguing that, unlike the head of the CFPB, the independent office in that case, the Independent Counsel, was an inferior officer. By distinguishing these cases, the administration tries to thread the needle and strike CFPB independence while keeping multi-member agency and inferior officer independence on the books.

But if the Court can't see its way to navigate these waters, the administration has another suggestion: overrule Humphrey's Executor and Morrison v. Olson. Footnote 2 of the brief reads:

If this Court were to conclude that Humphrey's Executor or Morrison requires upholding the removal restriction, it should consider whether those cases should be overruled in part or in whole. That issue is fairly encompassed in the question presented.

If so, the whole idea of agency independence could go away.