Those lining up to defend the current leadership structure of the Consumer Financial Protection Bureau, including the House of Representatives, 23 state attorneys general, and a large number of consumer advocacy groups all filed their amicus briefs with the Supreme Court earlier this week.
The Supreme Court is due to hear arguments in Seila Law v. CFPB in early March, in a case that seeks to determine whether the leadership structure of the CFPB — a single director who can only be fired for cause — is legal or not. If the Supreme Court determines the structure is not legal, the question then becomes what to do — whether to change the structure so that the director can be fired for any reason, or whether the CFPB needs to be dismantled.
The CFPB issued Seila Law a Civil Investigative Demand letter seeking answers to seven interrogatories and four requests for documents. Seila Law 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.
Seila Law is seeking to have the Supreme Court invalidate the entire section of the Dodd-Frank Wall Street Reform and Consumer Protection Act which created the CFPB.
“Depriving the CFPB of all of its powers, as petitioner demands, would harm Amici States by eliminating the CFPB’s independent enforcement efforts and the valuable assistance it provides to the States,” the two dozen state AGs wrote in their brief. “And invalidating the entirety of Title X would cause even greater injury by stripping from the States the additional substantive powers and protection from federal preemption that Congress sought to confer.”
Trying to unwind the CFPB would “severely disrupt” how consumer financial services laws are regulated and enforced across the country, the House of Representatives argued in its brief, because other agencies lack the manpower and resources to suddenly pick up wherever the CFPB left off.
“Other possible agency designs, such as multi-member commissions with staggered terms, increase the likelihood that a President will be able to make at least one appointment but reduce the efficacy of any single appointment in influencing the agency’s direction,” wrote a number of advocacy groups, including the Consumer Federation of America and the National Association of Consumer Advocates. “The choice between a single director and a commission, in short, involves tradeoffs with cross-cutting implications for presidential influence. As long as Congress’s choices do not prevent the President from performing his constitutional functions, debates over which structural arrangement would render an agency marginally more or less responsive to presidential oversight do not render those choices impermissible.”