SCOTUS: Seila Law LLC v. Consumer Financial Protection Bureau - Agency independence

Issue before or regarding the Supreme Court of The United States

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... at the Supreme Court Tuesday, the court's conservative majority voiced skepticism about the independent agency Congress created to protect consumers from abuse in the financial services industry.

In the aftermath of the financial crisis, the CFPB enacted new rules to safeguard the mortgage market and protect consumers from abusive and misleading practices involving everything from credit cards to debt relief. The bureau is headed by a single director, appointed by the president for a five-year term, and lodged in the Federal Reserve.

In order to ensure the director's independence, the law bars the president from firing him or her for any reason except malfeasance, inefficiency, or neglect of duty.

It is that independence from presidential firing that is being challenged as unconstitutional by Seila Law — a law firm under CFPB investigation for misleading practices — and the Trump administration. Both the firm and the administration are asking the Supreme Court, if necessary, to strike down a long line of decisions going back almost a century, that uphold the structure of all independent regulatory agencies.
...
At the end of the day, there appeared to be five conservative justices unwilling to recognize that kind of independence for the CFPB, and four liberal justices with an opposite view.

A decision in the case is expected this summer.
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https://www.npr.org/2020/03/03/8117...on-independence-of-consumer-protection-agency

If SCOTUS rules 5-4 to give the President authority to fire at will, it could open the door for political pressure to coerce Fed policy. Big ramifications on this one.
 
President Donald Trump launched another attack on Jerome Powell Saturday, suggesting he could remove the Federal Reserve Chairman and place him in another role within the central bank.

Speaking to reporters at the White House as part of a briefing on efforts to combat the coronavirus outbreak, Trump once again expressed his displeasure with the Fed and its Chairman, accusing them of "following, not leading" in terms of offering monetary support for the world's biggest economy during the global pandemic.

Trump also said that he had "the right" to fire Powell, but wouldn't do so, instead suggesting he could come the Chairman "into another role" at the Federal Reserve instead.
...
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https://www.thestreet.com/investing/trump-says-he-can-move-fed-chairman-powell-to-different-role

SCOTUS ruling will be very interesting indeed.
 
The case mentioned in the OP was decided in June 2020:
Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. ____ (2020) was a U.S. Supreme Court case which determined that the structure of the Consumer Financial Protection Bureau (CFPB), with a single director who could only be removed from office "for cause", violated the separation of powers. Handed down on June 29, 2020, the Court's 5–4 decision created a new test to determine when Congress may limit the power of the president of the United States to remove an officer of the United States from office.

The Court recognized that the president may generally remove officers at will. However, the Court stated there were two exceptions to this rule. First, the president's removal power may be constrained by Congress if the officer in question is a member of an agency that shares similar characteristics to the Federal Trade Commission as discussed in Humphrey's Executor v. United States (1935). Second, Congress may constrain the president's removal power over "inferior officers with limited duties and no policymaking" role as discussed in Morrison v. Olson (1988). The Court declined to extend the exceptions to "an independent agency led by a single director and vested with significant executive power."

The Court also held that the directorship position was severable from the statute that established the CFPB, allowing the CFPB to continue to operate.
...
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Seila Law LLC v. Consumer Financial Protection Bureau - Wikipedia

en.wikipedia.org en.wikipedia.org

Full decision:

~~~

A different challenge has arisen:
The U.S. Supreme Court on Monday said it would hear a case that will decide the future of the Consumer Financial Protection Bureau.

The case revolves around the constitutionality of the CFPB’s funding mechanism. After the CFPB issued a payday-lending rule in 2017, industry groups challenged the rule in court, arguing in part that the agency’s funding structure–which draws money from the Federal Reserve rather than annual Congressional appropriations–is unconstitutional. Last fall, the Fifth Circuit federal appeals court rejected most of the trade groups’ arguments against the rule but ruled that the CFPB’s funding structure violates the Constitution’s appropriations clause and separation of powers doctrine.

That decision not only overturned the payday-lending rule and put a legal cloud over every action the CFPB has taken since its launch 12 years ago, it also raised questions about a host of other government agencies and programs that are funded outside the annual Congressional appropriations process, legal experts say.
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www.marketwatch.com

Supreme Court to hear case that will decide the future of consumer financial protection

Constitutionality of the Consumer Financial Protection Bureau’s funding mechanism at issue in case that is “existential” for the agency
www.marketwatch.com www.marketwatch.com
 
Would be better to eliminate the FED and replace it with a computer or dart board.
 
  • The U.S. Court of Appeals for the Second Circuit on Thursday ruled the Consumer Financial Protection Bureau’s funding structure is constitutional.
  • In a decision that upholds a lower court’s 2020 ruling in favor of the consumer watchdog, the three-judge panel also rejected a ruling made by the Fifth Circuit Court of Appeals last year.
  • The decision comes as the Supreme Court in February agreed to hear the Fifth Circuit’s case challenging the CFPB’s funding apparatus.
www.bankingdive.com

CFPB funding is constitutional, 2nd Circuit court rules

The decision creates a clear conflict between the Second and Fifth Circuits, providing the Supreme Court with further incentive to directly resolve the issue, said an attorney at Dorsey & Whitney.
www.bankingdive.com www.bankingdive.com
 

The Supreme Court is about to rule on America’s most powerful, unaccountable federal agency​

The Supreme Court will hear oral arguments Tuesday in a case that might invalidate the most powerful federal administrative agency ever created.

Consumer Financial Protection Bureau v. Community Financial Services Association of America is an appeal of the Fifth Circuit’s unanimous holding that the CFPB’s use of the Federal Reserve System to fund its operations violates the Constitution’s separation of powers.

More here:

https://www.msn.com/en-us/money/mar...1&cvid=39613f37e75643689e20f807f9a8988b&ei=66
 
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Supreme Court sides with the Consumer Financial Protection Bureau, spurning a conservative attack​

WASHINGTON (AP) — The Supreme Court on Thursday rejected a conservative-led attack that could have undermined the Consumer Financial Protection Bureau.

The justices ruled 7-2 that the way the agency is funded does not violate the Constitution, reversing a lower court. The CFPB was created after the 2008 financial crisis to regulate mortgages, car loans and other consumer finance.

The case was brought by payday lenders who object to a CFPB rule.

The CFPB case is among several major challenges to federal regulatory agencies on the docket this term for a court that has for more than a decade been open to limits on their operations. The CFPB, the brainchild of Democratic Sen. Elizabeth Warren of Massachusetts, has long been opposed by Republicans and their financial backers.

More:

https://www.msn.com/en-us/news/poli...S&cvid=4746aabe5f664fec85dcd38d9c41ff8a&ei=26
 
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Business mogul and presumed Trump Cabinet appointee Elon Musk called for the elimination of the Consumer Financial Protection Bureau, in a post Wednesday on social media platform X, which he owns.

“Delete CFPB. There are too many duplicative regulatory agencies,” Musk wrote.

The consumer watchdog, a product of the post-financial crisis Dodd-Frank Act, has long been the subject of Republican ire. Rep. Patrick McHenry, R-NC, ranking member on the House Financial Services Committee, told Director Rohit Chopra in December 2022 that under a Republican-majority Congress, “I think you’ll wish you tried harder to play by the rules.”

Earlier this year, the Supreme Court upheld the CFPB’s funding structure. Challengers took issue with the fact that the CFPB’s funding comes from the Federal Reserve, rather than Congress, but the nation’s highest court found in a 7-2 decision that that did not violate the U.S. Constitution’s separation-of-powers principles.

More than two dozen Republican attorneys general tried to join challengers in their case against the CFPB but were barred by the Supreme Court for undisclosed reasons.

McHenry, at the time, pledged that Republicans would continue the fight “to rein in the rogue CFPB.”
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More:
www.bankingdive.com

Musk calls for end to CFPB

The presumed Trump Cabinet appointee said there “are too many duplicative regulatory agencies,” calling out the consumer watchdog specifically Wednesday.
www.bankingdive.com www.bankingdive.com
 
Update:

Consumer financial watchdog is ordered by acting director to stop fighting financial abuse​

Russell Vought, the newly installed acting director of the Consumer Financial Protection Bureau, sent an email Saturday night ordering all employees at the consumer watchdog to stop virtually all work – including fighting financial abuse.

“Effective immediately, unless expressly approved by the Acting Director or required by law, all employees, contractors and other personnel of the bureau shall…cease all supervision and examination activity,” Vought wrote in the email, a copy of which was viewed by CNN.

In practice, this means that the nation’s top consumer financial watchdog has effectively been pulled off the street, prevented from providing oversight over big banks, payday lenders and other financial institutions that could be hurting consumers.

More:

https://www.msn.com/en-us/news/poli...S&cvid=32e68f59fbdc457bbc57ecfd49c1ac7b&ei=27
 
Instead of ordering employees to stop working on specific cases, they issued a blanket stop everything and then are using discretion to decide which cases to allow. IMO, it's a nothingburger of a headline. I expect important work will continue while Biden admin excesses will get culled. Time will tell.
 

If your bank rips you off, the Consumer Financial Protection Bureau gets your money back. Elon Musk is killing it​

Earlier this month, an X user posed a simple question to Elon Musk after the Donald Trump-appointed government slasher threatened the existence of the Consumer Financial Protection Bureau.

"What is the deal with the CFPB?" Scott G asked.

Musk had just posted "CFPB RIP," seemingly an indication that the bureau was on the billionaire’s hit list.

"I'm genuinely curious @elonmusk," Scott wrote. "I've used the CFPB after my bank was giving me the run around and I had a bunch of fraud charges that they wouldn't refund me, after telling me they found them as fraudulent. Within a week I had my money back. So explain to me how this doesn't benefit us as American citizens?"

He isn’t alone, the independent agency estimated its enforcement has resulted in $21 billion in compensation for Americans. Anyone who wasn't raked over the coals by an overdraft fee can thank the CFPB. Those who weren't paid interest on their Capital One supposed high yield savings account received payouts after the agency took the bank to court on their behalf. Anyone who might have fallen prey to predatory lending practices — the same that plunged the U.S. into the Great Recession and financial crisis of the early 2000's — can rest assured that the agency stopped banks from offering them in the first place.

More:

https://www.msn.com/en-us/money/com...S&cvid=81787024f4e447a8e882536ef430b406&ei=11
 

Column: Trump’s move to kill federal consumer watchdog will protect Big Business but cost consumers billions​

Back in 2018, during Donald Trump’s first term, his appointed director of the Consumer Financial Protection Bureau, Mick Mulvaney, gleefully described his plan to emasculate the bureau by bringing the financial firms victimizing Americans under its protective umbrella.

“We are there to help protect people who use credit cards,” he told an appreciative audience of credit union executives. “We’re also there to help and protect the people who provide that credit…. We are there to help people who borrow money; but we’re mindful and respectful of the people who provide those loans.”

Mulvaney couldn’t resist taking a swipe at Sen. Elizabeth Warren (D-Mass.), who had conceived of the CFPB and acted to create it as part of the Dodd-Frank financial reform act of 2010.

More:

www.latimes.com

Column: Trump's move to kill federal consumer watchdog will protect Big Business but cost consumers billions

The Consumer Financial Protection Bureau saved consumers money but enraged businesses. Now Trump has moved to kill it.
www.latimes.com www.latimes.com
 
Another opinion piece decrying Trump's move. Seems that the more I hear no one is happy with this except those who want a free rein with other people's money.

boondoggle.substack.com

States and the Coming Scam-Apocalypse

Reduced federal consumer protections will leave state governments in the lurch.
boondoggle.substack.com boondoggle.substack.com
 
I see a lot of gnashing of teeth and wailing, but AFAIK, parts of the CPFB are supposed to be absorbed into other existing departments and many of the CPFB functions will continue, so it seems like a lot of politically motivated hot air at the moment. $.02
 

CFPB, the consumer watchdog agency, under fire by President Trump, DOGE | 60 Minutes​

Feb 24, 2025

The Consumer Financial Protection Bureau, a watchdog agency created to protect consumers, is under fire by President Trump and DOGE. Its new head ordered work to stop and funding to end.


13:12
 

New York AG announces bill to protect consumers from scams after Trump hobbles CFPB​

  • New York Attorney General Letitia James on Thursday announced a bill to protect the state’s consumers and small businesses from scams and deceptive practices from lenders, debt collectors and health care firms.
  • James said in a release that the legislation would bolster the state’s existing consumer protection law — which dates from 1970 and is more limited in scope.
  • The Trump administration has hobbled the CFPB, the federal agency charged with that task.
More:

 

U.S. judge temporarily blocks mass firings at consumer bureau​

  • A federal judge on Friday halted the mass firings carried out Thursday afternoon at the U.S. Consumer Financial Protection Bureau.
  • On Thursday, the agency fired between 1,400 and 1,500 workers, eliminating as much as 90% of its workforce.
A federal judge on Friday halted the mass firings carried out Thursday afternoon at the U.S. Consumer Financial Protection Bureau, saying she was deeply concerned that the Trump administration had violated court orders setting conditions on dismissals.

On Thursday, the agency fired between 1,400 and 1,500 workers, eliminating as much as 90% of its workforce.

More:

 
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