CFPB Director Informs Congress that Agency’s Single Director Structure is Unconstitutional

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cfpbAs we previously reported, on September 17, 2019, the Consumer Financial Protection Bureau (CFPB) reversed course by filing a Supreme Court brief agreeing with a petitioner that the agency’s single director structure is unconstitutional.  On the same day, the CFPB’s director, Kathy Kraninger, sent letters to Congress informing it of the agency’s new position.

Kraninger informed House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell that she believes the for cause removal provision is unconstitutional and that she directed the agency’s attorneys to “refrain from defending the for-cause removal provision in the lower courts.”  The argument is that the CFPB’s structure, with a single director and the restrictive for cause removal provision, violates the separation of powers principles laid out in the Constitution.  According to Kraninger, the CFPB’s structure is unconstitutional because it “impermissibly infringes the separation of powers fundamental to our constitutional structure,” by “unconstitutionally insulat[ing]” the CFPB’s director “from Presidential control.”

Kraninger maintains that her decision as to the constitutionality of the provision will “not affect [her] commitment to fulfilling the Bureau’s statutory responsibilities.”  But the CFPB’s decision not to defend the constitutionality of the provision may at least impact pending cases in which this issue has been raised.  For example, companies opposing the CFPB in investigative proceedings or litigation could all raise this issue in their own proceedings, which could result in a tangled mix of lower-court opinions unless the Supreme Court rules on the provision’s constitutionality.

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