Justice Brett Kavanaugh is expected to vote to kill the Consumer Financial Protection Board’s single-director structure in Seila Law. v. CFPB, in a major test of executive power the High Court agreed last week to tackle this term.
The Court announced on Wednesday it invited former Solicitor General Paul Clement of Kirkland & Ellis to defend the CFBP, after President Trump’s Justice Department abandoned the case, an odd choice as Clement has argued on behalf of the conservative side in high-profile cases covering gerrymandering, same-sex marriage and Obamacare.
Clement also will argue for the NRA in the upcoming Second Amendment case scheduled for January.
A Headless Fourth Branch of Government
In 2016, while serving as a U.S. Court of Appeals judge for the District Court of Appeals, Kavanaugh wrote an impassioned majority decision that the President’s inability to fire the sole director of the bureau expect for “inefficiency, neglect of duty or malfeasance”, violates the Constitution’s separation of powers.
“The independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. Government,” Kavanaugh wrote.
When his 2016 majority decision was partially reversed in a 250-page en banc opinion issued in January 2018, Kavanaugh dissented.
Seila Law’s Telemarketing Violations
Seila Law involves a civil investigative demand (CID) Seila received from the CFPB seeking information on alleged telemarketing violations.
Seila contested the CID, arguing the agency’s structure made it unconstitutional.
Seila lost its case in the Ninth Circuit Court of Appeals, which followed the precedent of the D.C. Circuit’s en banc ruling.
When the case was argued in the Ninth Circuit, the Trump administration filed a brief arguing that the agency is unconstitutional as it violates the separation of powers.
Progressives fear that Chief Justice John Roberts, Justices Samuel Alito, Neil Gorsuch and Clarence Thomas will side with Kavanaugh to revoke the independence of the Obama-era bureau, whose director serves a five-year term.
The CFBP is widely regarded as Elizabeth Warren’s “brainchild”, conceived as a component of the 2010 Dodd-Frank Act, intended to staunch the massive financial fraud that triggered the 2008 recession.
Warren tweeted when Kavanaugh was confirmed in September, 2018, that he showed a “hostility toward consumers” and is “opposed to the CFPB & corporate accountability.”
Shifts in the Political Winds
David Dayen, writes in Prospect.org, “the CFPB structure was intended to insulate the director from shifts in the political winds, giving them a full five-year term to carry out their mission.”
“The idea that no federal government agency can have a single director who cannot be fired at will by the President would come as news to the Federal Housing Finance Agency, the Office of Special Counsel, and the Office of the Comptroller of the Currency, all of which have substantially the same setup,” Dayen writes.
Mulvaney Suspended Investigations, Fines and Data Collection
In 2017, President Trump appointed Mick Mulvaney, now his Acting Chief of Staff, to serve as the CFPB’s acting director, replacing Obama appointee, Richard Cordray.
Mulvaney promptly terminated investigations, froze hiring and halted data collection.
In February, 2019, after Kathleen Kraninger replaced Mulvaney, the bureau nixed restrictions on payday lenders that were scheduled for implementation later that year.
The upside of the attack on the CFPB would be that a Democratic President “could get rid of an unqualified, anti-regulatory Consumer Financial Protection director immediately,” Dayen of Prospect.Org concludes.