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SCOTUS: The President Can Fire the Director of the Consumer Financial Protection Bureau at Will

Statuette on desk with the words, "you're fired"
By Joseph Fawbush, Esq. on June 30, 2020 11:39 AM

Congress creates federal agencies to enforce the laws it passes. In some cases, Congress has specifically forbidden the President from terminating the leadership of such a federal agency except for cause. You can see the rationale for why: A president could theoretically use political pressure to enforce policy decisions aimed specifically at reelection, rather than for the purposes created by Congress.

An illustrative example is pressuring the Chairman of the Federal Reserve to lower interest rates a year or two before the election to provide a boost to the economy, regardless of whether that is sound economic policy. That is one reason why the Board of Governors of the Federal Reserve can only be fired for cause. Other agencies with this setup include the Commissioners of the Federal Trade Commission (FTC), the Commissioner of the Social Security Administration, and, until the Supreme Court's decision in Seila Law, LLC v. Consumer Financial Protection Bureau, the Director of the Consumer Financial Bureau (CFPB).

In all cases, Congress indicated they wanted the leadership of those agencies to have some independence from the current administration. Typically, independent agencies with leadership that can only be fired for cause are led by a board or commission. There are exceptions, however, including the CFPB and the Social Security Administration, which were led by a single director.

CFPB Director Now an At-Will Employee

On Monday, June 29, the Supreme Court held that it was within presidential authority to fire the director of the CFPB at will. To decide otherwise, a 5-4 majority held, would violate the separation of powers inherent in the Constitution. Under Article II, the President has broad authority to appoint and terminate other members of the Executive Branch.

The majority distinguished this case from other federal agencies. According to the majority's analysis, the Supreme Court has in the past endorsed for-cause removal for leadership at federal agencies that are run by a bipartisan committee on staggered terms, and for inferior officers who do not have broad policymaking powers. For example, the FTC has a bipartisan panel of commissioners that serve on staggered terms to preserve agency knowledge. The CFPB, on the other hand, has broad policymaking and enforcement powers, including issuing potential punishments, but only one director.

Justice Kagan issued the dissent, joined by her Democrat-appointed colleagues. Justice Kagan argued that the exceptions the majority highlighted about multiple members were “gerrymandered" to get a result that the majority wanted. Justice Kagan similarly dismissed the majority's emphasis on multiple directors: “[W]ith or without a for-cause removal provision, the President has at least as much control over an individual as over a commission—and possibly more." Finally, the dissent chided the majority opinion for it's “Schoolhouse Rock" summary of the separation of powers, arguing that nothing in Article II explicitly provides what the majority held.

What Happens to the CFPB?

Congress created the CFPB after the financial crash of 2008-09 to curb financial abuse. It has so far recovered over $11 billion for 25 million consumers in its approximately decade of existence.

The Supreme Court declined to hold the entire law creating the CFPB unconstitutional. Instead, it severed the for-cause provision, meaning that the director is now an at-will employee, just like most of us.

What About Other Federal Agencies?

The majority opinion does not specifically say all single-director agencies with for-cause removal provisions are unconstitutional, but the majority notes that those two other positions – the Director of the SSA and the Director of the Federal Housing Finance Agency - are both “modern" and “contested." So, it isn't likely either director is resting easy after this decision.

Related Resources:

Supreme Court Upholds Precedent, Invalidating Louisiana Abortion Law (FindLaw's U.S. Supreme Court)

Beyond the Headlines of the Supreme Court's DACA Decision (FindLaw's U.S. Supreme Court)

Supreme Court: Title VII Protections Include Sexual Orientation and Transgender Status (FindLaw's U.S. Supreme Court)

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