Supreme Court Rules CFPB Is Unconstitutional

In a landmark decision, the Supreme Court has ruled that the structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional and violates the separation of powers. Now, any sitting president will be able to remove the director of the CFPB should they wish. 

The ruling was 5-4, and according to RESPA News, the structure of the CFPB can be saved by removing the for-cause termination provision from the remainder of the Dodd Frank Act, the legislation that created the CFPB. This ruling has a massive impact on the future of the CFPB, where the president has the authority to appoint and remove heads of agency. Before this ruling, no one had the ability to remove a sitting director. 

"We therefore hold that the structure of the CFPB violates the separation of powers. We go on to hold that the CFPB Director's removal protection is severable from the other statutory provisions bearing on the CFPB's authority. The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will," the court stated. 

This decision of the Supreme Court was brought on through the case Seila Law versus CFPB, which made it all the way to the Supreme Court in 2019. According to American Banker, Chief Justice John Roberts, who wrote the 5-4 decision, said, " The CFPB's single-Director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual who is neither elected by the people nor meaningfully controlled (through the threat of removal) by someone who is."  

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