CU Trades Applaud Supreme Court Decision to Consider CFPB Structure

Credit union trade groups were pleased with the U.S. Supreme Court’s decision to consider the constitutionality of the CFPB’s structure, but consumer advocates warned that the agency could lose its independence if the single-director makeup is struck down.

“CUNA has consistently advocated for legislation that provides for a multi-person, bipartisan commission to lead the bureau, as was originally proposed by the Obama administration in 2009,” CUNA Chief Advocacy Officer Ryan Donovan said.

That reaction was echoed by NAFCU President/CEO B. Dan Berger. “Regardless of how the Supreme Court rules – NAFCU still believes that a commission structure at the CFPB is absolutely essential to ensuring greater transparency and accountability,” he said.

The Supreme Court on Friday agreed to accept a petition filed by Selia Law, a law firm that was the recipient of a civil investigative demand from the agency. The law firm challenged the agency’s structure, contending that having a single director who may only be removed for cause violates the U.S. Constitution.

Lower courts sided with the agency, which defended the structure until recently. CFPB Director Kathy Kraninger recently sent a letter to congressional leaders stating that her agency was abandoning its defense and instead, was siding with the Trump Administration.

Attorneys for the House have attempted to intervene in the case in an effort to defend the structure.

Donovan said that transforming the CFPB into a commission would bring diverse perspectives to its policymaking.

“A commission would allow for more open debate, diversity of thought, and a stable leadership structure that would better serve consumers in the long-run,” Berger said.

But consumer groups disagreed, saying that the CFPB would lose independence is the agency was not governed by a single director.

“If the Supreme Court invalidates the CFPB director’s for-cause removal protection, it would imperil the agency’s ability to function as intended, and it would allow free reign for bad financial actors to influence the agency,” said Yvette Garcia Missri, pending litigation counsel with the Center for Responsible Lending.

“The CFPB was created as a strong, independent agency with a director who could only be removed for cause so the Bureau could counter the entrenched political power of the financial industry,” said Lisa Donner, executive director of Americans for Financial Reform.

Allied Progress, another consumer advocacy group, on Friday called for Supreme Court Justice Brett Kavanaugh to recuse himself from the case.

As an appeals court judge, Kavanaugh had ruled in a separate case that the agency’s single-director structure was unconstitutional, a decision that was overturned by the full U.S. Court of Appeals for the District of Columbia.

“Justice Kavanaugh has demonstrated bias against the CFPB on these exact issues and must recuse himself from this case, said Allied Progress Director Derek Martin. “He has previously weighed in on the specific question at stake in this matter — whether the CFPB Director can be fired without cause. This case deserves to receive truly impartial judgement.”