WASHINGTON – The Supreme Court handed the Trump administration a big win Monday in its effort to tame the independent consumer agency created in the aftermath of the 2008 financial crisis.
The justices ruled 5-4 that Congress impinged too much on presidential authority by requiring that the Consumer Financial Protection Bureau’s director can be removed only because of inefficiency, neglect or malfeasance.
Chief Justice John Roberts authored the opinion and was joined by the court’s other four conservative justices. The four liberal justices dissented.
The CFPB “lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from presidential control,” Roberts wrote.
Associate Justice Elena Kagan and the court’s three other liberal justices dissented. Kagan said the court should not interfere in decisions made by Congress and President Barack Obama to address financial practices that caused a recession “and could do so again.”
“Today’s decision wipes out a feature of that agency its creators thought fundamental to its mission – a measure of independence from political pressure,” Kagan said.
The case was one of the biggest on the high court’s docket, not only because of the agency’s vast authority but as a major test of the separation of powers between the executive and legislative branches of government.
Conservatives have argued for years that presidents must have the ability to hire and fire top officials at will. During oral argument in March, Solicitor General Noel Francisco said that otherwise, a future president could get saddled with a predecessor’s Cabinet.
Ironically, the ruling could help former Vice President Joe Biden if he wins election in November and wants to replace Trump’s CFPB head with his own.
One of Francisco’s predecessors as the government’s top Supreme Court litigator, Paul Clement, had argued in court that it made sense for Congress to protect some officials from politics. As an example, he said lawmakers might rightfully insulate the head of the Centers for Disease Control from interference, the better to protect Americans during a pandemic.
The case also took on political overtones because the agency, created under Obama, was the brainchild of Elizabeth Warren before she won election to the Senate and became, for a time, a leading contender for the 2020 Democratic presidential nomination.
The consumer agency was created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act in order to regulate banks and credit institutions. To guard its independence, it was designed to have a single director removable during five-year terms only for “inefficiency, neglect of duty, or malfeasance in office.”
Two federal appeals courts upheld the structure of the bureau. The full U.S. Court of Appeals for the District of Columbia Circuit did so in 2018, but with a vehement dissent from Brett Kavanaugh before his confirmation to the Supreme Court.
“Independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. government,” Kavanaugh wrote. “Because of their massive power and the absence of presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.”
The Supreme Court originally upheld the constitutionality of independent agencies in 1935, but critics contended that precedent only protects those with multiple commissioners or board members, not single directors.
The Obama administration and the bureau’s first director, Richard Cordray, opposed any change to the agency’s structure. But Trump and the bureau’s current director, Kathleen Kraninger, disagreed.
Seila Law, which helps consumers in debt, brought the original challenge following a CFPB investigation. Its lawyer, Kannon Shanmugam, had called the agency’s structure “unprecedented and unconstitutional.”
Roberts worried during oral argument about setting a new standard, somewhere between independence and subservience, that could lead to more court cases. That, he said, “would be the worst of all possible worlds.”
This article originally appeared on USA TODAY: Supreme Court says consumer agency head can be removed without cause