This week the Supreme Court denied an appeal from the American Bankers Association to void the NCUA’s field of membership rule. In another action, the Court gave the U.S. President the ability to fire the director of the Consumer Financial Protection Bureau (CFPB), ruling that a legal provision restricting that authority is unconstitutional.
The decision makes the CFPB less autonomous, but preserves the organization by eliminating only the removal clause from the law, the brainchild of Elizabeth Warren, creating the bureau to protect consumers.
Kathy Kraninger, appointed by President Donald Trump, is the current head of the bureau.
An article in Politico says: “The structure of the CFPB violates the separation of powers,” Chief Justice John Roberts wrote in the 5-4 decision. “The agency may … continue to operate, but its director, in light of our decision, must be removable by the President at will.”
The opinion of the court stated, “Because the CFPB is headed by a single Director with a five-year term, some Presidents may not have any opportunity to shape its leadership and thereby influence its activities. A President elected in 2020 would likely not appoint a CFPB Director until 2023, and a President elected in 2028 may never appoint one. That means an unlucky President might get elected on a consumer-protection platform and enter office only to find herself saddled with a holdover Director from a competing political party who is dead set against that agenda. To make matters worse, the agency’s single-Director structure means the President will not have the opportunity to appoint any other leaders— such as a chair or fellow members of a Commission or Board—who can serve as a check on the Director’s authority and help bring the agency in line with the President’s preferred policies.”
Politico says, “The decision could have significant implications for the future of the similarly structured Federal Housing Finance Agency, the overseer of mortgage giants Fannie Mae and Freddie Mac.”