Supreme Court Asked to Rule on CFPB Constitutionality

A community bank and two conservative groups are asking the U.S. Supreme Court to finally decide the constitutionality of the CFPB’s makeup—an issue that has sparked prolonged political and legal debate since the bureau was created by Dodd-Frank.

“Dodd-Frank’s consolidation of expansive executive authority in the CFPB, unchecked by the separation of powers, represents an unprecedented threat to individual liberty,” the State National Bank of Big Spring, the Competitive Enterprise Institute, and the 60 Plus Association, Inc.

They argue that the agency is governed by a single director who can only be removed by the president for cause and its funding does not go through the annual appropriations process.

“In the history of the United States, no individual has ever wielded such expansive executive enforcement authority over an entire sector of private economic activity, devoid of the checks and balances the Constitution’s separation of powers requires,” they contend.

They add that judicial circuits are split on the issue of whether the CFPB is properly structured.

The U.S. Court of Appeals has ruled that the CFPB’s structure does not violate the Constitution. However, a panel in the Fifth Circuit Court of Appeals ruled that the Federal Housing Finance Agency—also governed by a single director—violates the Constitution.

“The D.C. Circuit and the Fifth Circuit have adopted completely divergent analytical approaches to determining the constitutionality of novel independent agency structures,” the bank and the two interest groups said.

Notably, by the time the Supreme Court decides whether to take the case, federal Judge Brett Kavanaugh may be a member of the court. Kavanaugh wrote an opinion for a panel of the U.S. Circuit Court of Appeals for the District of Columbia and ruled the CFPB’s structure is unconstitutional.

That decision was overturned by the full Circuit Court of Appeals.