Last fall, a divided three-judge panel of the U.S. Court of Appeals for the D.C. Circuit wrongly concluded that the leadership structure of the Consumer Financial Protection Bureau violates the Constitution. U.S. PIRG Education Fund, along with many others, urged the full D.C. Circuit to rehear the case and correct the obvious errors in the panel’s decision. We were pleased when the D.C. Circuit agreed with our position and decided to rehear the case.
With the case now before the full D.C. Circuit, U.S. PIRG Education Fund, along with twelve other consumer and civil rights groups, filed an amicus brief arguing that the CFPB’s leadership structure is constitutional and vitally important to its mission. In the wake of the worst financial crisis since the Great Depression—which was caused, in large part, by the failure of the federal financial regulators to enforce the consumer protection laws—Congress determined that a single, independent regulator was necessary. Thus, Congress created the CFPB and determined that it should be headed by a single director who serves a fixed term of five years and can only be removed by the president for “inefficiency, neglect of duty, or malfeasance in office.” This “for cause” removal protection guarantees the independence of the CFPB and protects it from being captured by the powerful financial services industry that it regulates.
This structure is entirely consistent with the Constitution and supported by Supreme Court precedent. As we say in our brief, the Supreme Court has repeatedly held that, as long as the president has the authority to remove the head of a regulatory agency for cause, the structure of the agency does not impinge upon the president’s duties under Article II of the Constitution. The fact that the CFPB is headed by a single director—as opposed to a multi-member commission, like the Federal Trade Commission—does not change this. The three-judge panel erred because it disregarded these principles and, instead, relied upon its own assessment of whether the CFPB’s leadership structure protects “individual liberty”—an amorphous concept that has never been part of the separation-of-powers analysis.
We are confident that the full D.C. Circuit will correctly apply the law and conclude that the leadership structure of the CFPB is fully consistent with the Constitution. Oral argument is scheduled for May 24, and a decision is expected in the fall or next spring.