To preserve consumer protection, CFPB must be led by commission

December 16, 2019

The creation of a multi-member leadership commission at the Consumer Financial Protection Bureau (CFPB) would remedy the constitutional defect currently present at the agency, CUNA argued in a brief filed with the U.S. Supreme Court Monday. CUNA filed the brief in Seila Law v. CFPB, a case questioning the constitutionality of having a single director removable only by cause leading the CFPB.

CUNA’s brief agrees with Seila Law and the CFPB that the single-director structure violates the separation of powers. The brief notes that the CFPB has the “broadest regulatory reach of any financial regulator,” and while the need for consumer protection in the U.S. remains, “CUNA agrees with Petitioner and the CFPB that Congress’s chosen design cannot withstand constitutional scrutiny because the statutory restriction on the President’s ability to remove the Bureau’s Director violates the separation of powers,” the brief reads.

“To preserve the consumer-protection benefits that the CFPB provides, while remedying the unconstitutional power vested in the agency’s Director, CUNA advocates that the Court vacate the lower court’s decision and shift the responsibility for fixing the Bureau’s structure to the political branches," it adds.

Specifically, CUNA says the court should hold all of Title X of the Dodd-Frank Act unconstitutional but stay the effect of that decision to allow Congress time to react to its decision and enact a commission structure to lead the CFPB.

The brief also notes that bipartisan, multi-member leadership at the CFPB was favored in early proposals that led to the creation of the CFPB, and that the structure of Title X of Dodd-Frank differs from the single-director structure at other federal regulators in several important aspects. This includes parameters for removal and succession.

Since the CFPB’s creation CUNA has been a strong proponent of replacing the single director with a bipartisan, multi-member commission. CUNA has noted that, to ensure that consumers enjoy strong and consistent protections and to prevent leadership changes from causing economic disruptions, the stability and diverse perspectives brought by a commission are essential.