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Supreme Court To Hear Arguments in CFPB Leadership Case

The Supreme Court announced today that it has decided to hear arguments in Seila Law v. Consumer Financial Protection Bureau, which will address — once and for all — whether the leadership structure of the CFPB is constitutional or not.

The decision by the Supreme Court is a win for critics of the CFPB and its leadership structure.

Kathleen Kraninger, the director of the CFPB has come out and said that it agrees with the petitioner in this case that its leadership is unconstitutional and should be changed, by either giving the President the power to fire the director for any reason instead of just for cause, or by altering the leadership structure to that of the Federal Trade Commission or Federal Communications Commission, both of which employ five commissioners and a chairman.

Democrats in the House of Representatives have expressed their support for the agency’s structure and asked to be appointed to defend that side of the argument in front of the Supreme Court.

A number of Appeals Courts have ruled on the constitutionality of the CFPB’s leadership structure, including the D.C. Court of Appeals, which was where Justice Brett Kavanaugh was when it ruled on PHH v. CFPB. Kavanaugh was in the minority when the D.C. Court ruled the CFPB’s leadership structure was not unconstitutional. But none of the Appeals Courts have ruled that the leadership structure is unconstitutional, which makes it odd that the Supreme Court would opt to hear arguments in a case in which there is no split opinions at the lower court levels.

Seila Law LLC — is fighting against having to comply with a Civil Investigative Demand that it received from the CFPB in regards to possible violations of the Telemarketing Sales Rule while selling debt relief services to consumers. The CFPB issued a CID seeking answers to seven interrogatories and four requests for documents. The defendant refused to provide the information, leading the CFPB to file a petition with a District Court, which sided with the regulator. Seila Law appealed that ruling to the Ninth Circuit, which also sided with the CFPB. Seila then appealed the ruling to the Supreme Court.

The Supreme Court did not set a date for when it would hear arguments in the case.

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