WASHINGTON -- The Supreme Court Monday struck down the semi-independent status of the consumer protection agency created in the wake of the 2008 financial collapse, and ruled the president has the power to hire and fire its director at will.
The justices, by a 5-4 vote, said Congress violated the president's constitutional authority over the executive branch when it established the Consumer Financial Protection Bureau with a director appointed by the president for a five-year term, but who could not be fired except for a specific cause, such as "neglect of duty or malfeasance in office."
The agency was created in 2010 at the behest of then-Harvard law professor and now Sen. Elizabeth Warren, D-Mass., with the aim of protecting consumers from Wall Street and other powerful financial interests. Its congressional sponsors sought to shield the agency from political influence by giving the director a five-year term in office.
But the Supreme Court's conservative justices have insisted in the past that the president's executive power means he may remove top officials for any reason.
"We therefore hold that the structure of the CFPB violates the separation of powers," Chief Justice John G. Roberts Jr. wrote. "We go on to hold that the CFPB director's removal protection is severable from the other statutory provisions bearing on the CFPB's authority. The agency may therefore continue to operate, but its director, in light of our decision, must be removable by the president at will."
The decision should have no immediate impact at the agency, because the current director, Kathy Kraninger, was appointed by President Donald Trump in 2018.
The decision could also work to the benefit of the Democrats. If former Vice President Joe Biden is elected as president, he would be free to fire Kraninger and replace her. Under the 2010 law, her term would have continued for three more years, regardless of who was president.
The case of Seila Law vs. CFPB began when agency officials were looking into allegations that a small Orange County law firm was violating its restrictions on the advertising and marketing of debt-relief services. When the agency sent a demand for information, the law firm refused and alleged the bureau was operating unconstitutionally.
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