A police officer walks in front of the U.S. Supreme Court April 6, 2020 in Washington, DC.
Alex Wong | Getty Images
The Supreme Court in a ruling Monday allowed the Consumer Finance Protection Bureau to continue operating, but said the director of the consumer watchdog could be removed by the president of the United States “at will.”
The decision, written by Chief Justice John Roberts, agreed with a California-based law firm’s argument that the CFPB’s leadership by a sole director who was removable “only for cause” violated the separation of powers rule under the U.S. Constitution.
The ruling overturns a federal district court ruling and appellate court ruling that had rejected the law firm’s arguments.
“The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will,” Roberts wrote in his decision.
The CFPB oversees consumer financial markets like credit cards and home mortgages. It returned nearly $12 billion to consumers through 2017, before largely curtailing enforcement actions under President Donald Trump.
The CFPB was first envisioned by Sen. Elizabeth Warren while she was a professor at Harvard Law School.
It was later established by Congress under President Barack Obama in the wake of the 2008 financial crisis.
The constitutionality of the bureau was challenged by the California law firm Seila Law, which alleged that the CFPB’s director’s insulation from presidential control was unlawful.
Under the 2010 law establishing the bureau, the director is appointed for a five-year term and may only be removed for “inefficiency, neglect of duty, or malfeasance in office.”
The case decided Monday by the Supreme Court is formally known as Seila Law v. Consumer Financial Protection Bureau, No. 19-7.
This is breaking news. Check back for updates.