House of Representatives Urges Supreme Court to Uphold Constitutionality of CFPB

Commentary by Bob Zwirb and Steven Lofchie

The House of Representatives filed an amicus curiae brief urging the Supreme Court to reject a challenge to the constitutionality of the CFPB. The CFPB is an independent agency within the Federal Reserve System created by Title X of the Dodd-Frank Act. The Supreme Court scheduled the matter for oral argument on March 3, 2020.

The House brief argued that the Court should affirm the Ninth Circuit's ruling in Seila Law LLC v. Consumer Financial Protection Bureau, 923 F.3d 680 (9th Cir. 2019), which upheld the CFPB's constitutionality following the refusal of Seila Law LLC ("Seila"), a debt-collection firm, to comply with a civil investigative demand ("CID") issued by that agency. In its petition to the Supreme Court, Seila argued that the CID is unlawful because the CFPB is unconstitutionally structured. In particular, Seila maintained that CFPB's regulatory structure violates the Constitution's separation of powers because it is an independent agency headed by a single Director who exercises substantial executive power but can be removed by the President only for cause.

The House brief addressed two questions: (i) whether the CFPB Director's removal protection violates the separation of powers and (ii) whether a constitutional flaw in the CFPB Director's removal protection entitles Seila to relief from the civil investigative demand, and requires invalidation of Title X of the Dodd-Frank Act, the statutory provision creating the CFPB.

In its brief, the House urged the Supreme Court to avoid ruling on the constitutionality of the CFPB Director's removal protection, arguing that the Court should rule that the CID would be enforceable even if the removal protection is invalid. Second, the House contended that if the Court does reach the constitutional question, it should uphold the CFPB Director's removal protection, arguing that such protection "is exactly the same as" that provided members of other independent agencies such as the FTC, and that the CFPB's single-director structure enhances, rather than diminishes, the agency's accountability to the President. Finally, the House argued that the constitutionality of the removal protection should not affect Title X and, therefore, the legal viability of the CFPB, pointing to the severability provision within the Dodd-Frank Act, which states that if "any provision" of the statute "is held to be unconstitutional, the remainder of th[e] Act . . . shall not be affected thereby."

Amici curiae briefs from New York and 23 other state attorneys general, the National Consumer Law Center, and several other consumer-advocacy organizations echoed similar arguments in support of preserving the CFPB’s structure. Click here to see all amici briefs submitted on the constitutionality of the CFPB.


Bob Zwirb
Bob Zwirb

The CFPB was designed precisely to insulate it from both political and budgetary accountability. While it is to be expected that the House, which helped to create this structure, would seek to perpetuate it, the CFPB structure indeed raises a number of significant legal and policy concerns that merit comment.

In defending the CFPB’s unique regulatory structure, the House brief contends that “[t]he CFPB fits comfortably within the Nation’s long tradition of independent regulatory agencies,” comparing it to that of other agencies such as the FTC. But that ignores the fact that the CFPB, as one federal appellate judge, Judge Karen Henderson of the D.C. Circuit, has noted, “is an agency like no other” whose structure “frees the agency from a powerful means of Presidential oversight and the Congress's most effective means short of restructuring the agency.”  PHH Corp. v. CFPB, 881 F.3d 75, 137, 138 (D.C. Cir. 2018) (Henderson, J., dissenting). See also, Todd Zywicki, The Consumer Financial Protection Bureau: Savior or Menace?, 81 Geo. Wash. L. Rev. 856, 899 (2013) ("[T]he agency structure Congress chose for the CFPB - a single-director structure, devoid of accountability, and with vast, ill-defined powers - appears to be unique in recent American history."). It also ignores the fact that, as currently structured, the CFPB, as Judge Henderson notes, is “not even a distant cousin of [other independent agencies like] the FTC.” PHH Corp., 881 F.3d at 146 (Henderson, J., dissenting). Moreover, contrary to the House’s assertion, as Judge Henderson continues, “the FTC is a deliberative expert nonpartisan agency that reports to the Congress. The CFPB is a unitary inexpert partisan agency that reports to no one.” Id. at 151.

While it is not uncommon for executive branch agencies to be headed by a single individual, “[n]o independent agency exercising substantial executive authority,” as then D.C. Circuit Judge Brett Kavanaugh explains, “has ever been headed by a single person.” PHH Corp., 881 F.3d at 165 (Kavanaugh, J., dissenting) (emphasis in original). Likewise, while the removal-at-cause provision for the CFPB’s Director is also commonplace in the authorizing statutes of independent agencies, it is not for single-member regulatory agencies, who instead usually serve at the pleasure of the President. Combined with the facts that the CFPB, as the agency itself boasts, is "fund[ed] outside of the congressional appropriations process to ensure full independence," CFPB, Strategic Plan: FY2013-FY2017, at 36 (Apr. 2013), and that the five-year term of the Director outlasts a Presidential term, these elements when taken together make that agency, in the words of Judge Kavanaugh, “exceptional in our constitutional structure and unprecedented in our constitutional history.” 881 F.3d at 179 (Kavanaugh, J., dissenting).

As Justice Kavanaugh further explained in his dissent in the PHH case, it is the combination of these factors - “power that is massive in scope, concentrated in a single person, and unaccountable to the President” - that triggers the constitutional issues at play here:

The Director of the CFPB wields enormous power over American businesses, American consumers, and the overall U.S. economy. The Director unilaterally implements and enforces 19 federal consumer protection statutes, covering everything from home finance to student loans to credit cards to banking practices.

The Director alone may decide what rules to issue. The Director alone may decide how to enforce, when to enforce, and against whom to enforce the law. The Director alone may decide whether an individual or entity has violated the law. The Director alone may decide what sanctions and penalties to impose on violators of the law.

Because the CFPB is an independent agency headed by a single Director and not by a multi-member commission, the Director of the CFPB possesses more unilateral authority - that is, authority to take action on one's own, subject to no check - than any single commissioner or board member in any other independent agency in the U.S. Government. Indeed, other than the President, the Director enjoys more unilateral authority than any other official in any of the three branches of the U.S. Government.

881 F.3d at 165-66 (Kavanaugh, J., dissenting). See also dissenting statement of Judge Henderson, 881 F. 3d at 155 (“The apt analogy is not math but chemistry: even if innocuous in isolation, some elements are toxic in combination").

Thus, the problem with the CFPB is twofold. First, as discussed above, the agency seems to have been deliberately designed in a manner to insulate it from accountability. See Note, Independence, Congressional Weakness, and the Importance of Appointment: The Impact of Combining Budgetary Autonomy with Removal Protection, 125 Harv. L. Rev. 1822, 1824 n.15 (2012) (the CFPB's lack of a multi-member board is "atypical for independent agencies and will amplify the Director's independence"). Second is how this insulation from normal checks and balances has played out in practice. As dissenting Judge Karen Henderson noted in PHH, “[b]y at least some accounts, for instance, the CFPB under its first Director hired all but exclusively from one political party, deliberately weeding out applicants from other parties and the banking industry.” PHH, 881 F.3d at 149, citing Todd Zywicki, The Consumer Financial Protection Bureau: Savior or Menace?, 81 Geo. Wash. L. Rev. 856, 877, 895 (2013) (asserting that the agency hired staffers and "true believers" from one political party). See also PHH, 881 F.3d at 146 (Henderson, J., dissenting) (“[t]he agency has made the most of its autonomy: when legislators have sought explanation for its spending or policies, it has stonewalled”).

It is not clear whether these objections are sufficient to trigger reversal. Aside from the fact that the position articulated by the House has been endorsed in two federal circuits - the Ninth in Seila and the D.C. Circuit in PHH Corp., - two Republican-appointed Directors of the Bureau, Mick Mulvaney and Kathy Kraninger, ratified the issuance of the CID initially issued under their Democratic predecessor; and one of them (Ms. Kraninger) expressed her view that she serves at the pleasure of the President, making the constitutional issue arguably moot. It also doesn’t help opponents of the CFPB that the Court appointed one of the leading conservative constitutional lawyers to argue on behalf of the agency, former Republican Solicitor General Paul Clement (in response to the Trump administration’s decision not to defend the CFPB), and that Mr. Clement has filed a brief that is both powerful and compelling.

That said, Justice Kavanaugh, whose 70-page plus dissent in the PHH case concluded that “the CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency,” now sits on the Supreme Court.


Leaving aside the big picture question of the constitutionality of the CFPB structure, the CFPB structure makes for bad public policy. It represents an immense amount of power concentrated in the hands of a single individual, who does not report to any branch of Congress. There is simply no good reason why the CFPB should not be reorganized following the same basic structure as the other independent regulatory agencies, with representation from both political parties on the Commission, and the leader of the Commission being appointed by the current President, of whichever party that might be.

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