Supreme Court Will Hear Seila Law v. Consumer Protection Agency

In a major victory for opponents of financial regulation, the Supreme Court has agreed to take up the lawsuit Seila Law vs. the Consumer Financial Protection Bureau. The case involves a law firm that refused to comply with a CFPB request for documents. The firm calls the agency’s structure unconstitutional, arguing that the bureau’s director enjoys too much independence from executive branch authority. The Trump administration and CFPB Director Kathy Kraninger back the challenge. It could result in dismantling the agency. The CFPB was created in 2010 by the Dodd-Frank Wall Street reform law. It was designed to police the financial sector for consumer fraud and abuse. The law prevents the president from firing the CFPB director before his or her five-year term expires unless “for cause” — severe neglect or misconduct. Seila Law and the Trump administration argue that the “for cause” provision hinders the president’s constitutional authority over the executive branch. A district court ruling in favor of the CFPB was upheld by the Ninth Circuit. A panel of the U.S. Court of Appeals for the DC Circuit ruled in 2016 that the agency’s structure was unconstitutional, but that decision, authored by current Supreme Court Justice Brett Kavanaugh, was overturned by the full appeals court in 2018. Liberal supporters of the agency fear the high court will rule the agency — designed by Sen. Elizabeth Warren, then an Obama adviser, to be an independent check on banks, lenders, credit card companies and debt collectors — unconstitutional and shut it down.