Column: A conservative federal judge takes an overheated slap at the Consumer Financial Protection Bureau

Spared a death sentence? CFPB Director Richard Cordray, center, at a hearing in March.
(Associated Press)

There’s nothing inherently wrong with judges expressing themselves passionately or colorfully, and nothing inherently partisan when they do so, on one side or another. The Supreme Court in the 1930s was famous for the impassioned byplay among its members, as when conservative Justice James McReynolds groused in dissent from a pro-New Deal opinion, “Shame and humiliation are upon us now.”

But there’s still something odd about the ruling issued Tuesday by Judge Brett Kavanaugh of the U.S. Court of Appeals for the District of Columbia, possibly the most important court in the land next to the Supreme Court. Kavanaugh was writing for a near-unanimous three-judge panel. (One judge dissented in part, as we shall see.)

This is a case about executive power and individual liberty.

U.S. Court of Appeals Judge Brett Kavanaugh

The judges found the structure of the Consumer Financial Protection Bureau, a product of the Dodd-Frank reforms, to be unconstitutional. Kavanaugh was cogent on his reasoning. But his tone was grossly overheated, and openly ideological. So much so that one must think about what was really going on here. The answer is that the ruling looks like another conservative attack on a consumer-friendly agency that Republicans absolutely hate.


“This is a case,” Kavanaugh began, “about executive power and individual liberty.” In fact, he added, it’s about “a grave threat to individual liberty.” That phrase, “individual liberty,” appears at least 35 more times in Kavanaugh’s 98-page majority opinion, by my count. So the abuse that the panel stamps out must be pretty durn frightful, right?

Well, you be the judge. Essentially, the court declared unconstitutional the arrangement by which CFPB director Richard Cordray serves a fixed five-year term. Typically, Kavanaugh observed, the heads of executive branch agencies either serve at the president’s pleasure or as part of a multi-member commission — think the Securities and Exchange Commission. The idea is that agency chiefs’ powers are either limited by the president’s authority or checked by their fellow commissioners.

“No independent agency exercising substantial executive authority has ever been headed by a single person,” Kavanaugh thundered. “Until now.” (Italics are in the original ruling.)

That’s the menace that Kavanaugh found so extreme. One would almost buy into his position, were not the judges’ remedy and the circumstances of the case so mundane. Rather than declare the whole CFPB unconstitutional, the court merely directed that henceforth, the director must serve at the president’s pleasure. The judges disposed of the issue that brought the case to them, a CFPB fine against PHH Corp., a suspect mortgage lender, relatively easily; they vacated the penalty, ruled, that the agency misapplied the law and told it to try again. Indeed, the one murmur of dissent came from Judge Karen L. Henderson, who said that PHH’s position was so obviously right under the law that the majority didn’t need to touch on the constitutional issues at all and should have kept its collective mouth shut about them.

In other words, despite Kavanaugh’s horror at the unlimited power exercised by CFPB director Cordray (who was confirmed by the Senate in 2013), obviously the agency’s actions are subject to judicial review, which the court duly exercised.

So what really is going on here?

Kavanaugh, a George W. Bush appointee, has a sizable background as an ideological warrior. He first made his spurs as an assistant to independent prosecutor Ken Starr in the President Clinton scandals, and as a principal author of the notorious Starr Report. As a judge in 2011, he voted to throw out the Affordable Care Act (but was in the minority), and even asserted that a president has the right to deem a law unconstitutional and refuse to enforce it, even if it’s been upheld by the courts.

It’s hard to avoid the impression that Kavanaugh’s language is connected to conservatives’ long-term distaste for the CFPB. As Kevin Drum observes, “their real problem with the CFPB is that they don’t want to regulate the financial industry at all.” He’s right. It’s not unusual at all for conservatives to couch their opposition to regulation, financial or otherwise, in the language of “individual liberty,” as Kavanaugh did here. Sure enough, Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee and a sedulous critic of the CFPB, marked the day of the ruling as “a good day for democracy, economic freedom, due process and the Constitution.”

This isn’t new, but it’s transparent: Going back to the 1930s again, New Dealer Harold Ickes decried a Supreme Court ruling overturning a state minimum wage law as an infringement on the right of contract by growling, “the sacred right of liberty of contract again—the right of an immature child or a helpless woman to drive a bargain with a great corporation.”

To be fair, Republicans have objected to Cordray’s concentrated authority from the start. But their attacks on the CFPB are typically much broader. As recently as the hearings on Wells Fargo’s misdeeds, congressional Republicans tried to blame the CFPB for failing to uncover the scandal itself, as though it’s Cordray’s fault, not that of Wells Fargo’s departing chairman and CEO, John Stumpf.

The CFPB, as it turns out, survived this brush with judicially-administered death. But the remedy fashioned by Kavanaugh and his colleague could be a ticking time bomb; any new president could disembowel the CFPB or even turn it into the most consumer-unfriendly agency in Washington simply by appointing the wrong person as its director. If we had to say goodbye to Richard Cordray and welcome, say, CFPB Director John Stumpf, what would the harvest be?

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