CFPB Neither Protects Consumers Nor Is a Constitutional Board

The en banc D.C. Circuit ruling was disappointing but not unexpected given the government‐​sympathetic lean of the court. The director of the CFPB reports to no one but himself, and, under the terms of Dodd‐​Frank, can be removed by the president only for cause. (Judge Griffith in concurrence understands that provision to include firing based on policy disagreement, but there’s no way that this view could command a majority of the court if that eventuality ever happened.) 


As Cato argued in our brief, this structure violates core principles of separation of powers and allows the agency to exist unfettered by any accountability to the people. These constitutional problems would be reason enough to fear the CFPB, but they’re not merely academic. The way Director Richard Cordray wielded his considerable authority demonstrates just how important these checks are, but the fact that he’s been by replaced Mick Mulvaney—whose actions thus far are more to my policy liking—doesn’t change the constitutional calculus. 


The Supreme Court should now take up PHH v. CFPB, as it has the structural challenge to the SEC’s administrative law judges in the Lucia case, and find that the Constitution cannot countenance this fifth branch of government (or is it sixth or seventh? I’ve lost count).