Advertisement
Business

Trump administration asks Supreme Court to limit CFPB’s independence

Kathy Kraninger
The president should be allowed to fire the Consumer Financial Protection Bureau’s director for any reason, Trump administration lawyers say. Above, Director Kathy Kraninger.
(Carolyn Kaster / Associated Press)

The Trump administration is urging the U.S. Supreme Court to give the president more control over the Consumer Financial Protection Bureau, the agency that regulates mortgages and credit cards.

Asking the court to take up a pending appeal, Trump administration lawyers said the Constitution requires that the president be allowed to fire the agency’s director for any reason. The 2010 law that set up the CFPB says the agency’s director can be removed only for “inefficiency, neglect of duty, or malfeasance in office.”

The administration’s position increases the chances the court will take up the issue in the nine-month term that starts in October. A ruling would come by June, months before the 2020 presidential election.

The filing was a response to an appeal filed by Seila Law, a California law firm being investigated by the CFPB over its sales pitches to indebted consumers. The firm is trying to derail the investigation by arguing that the CFPB was set up in violation of the constitutional separation of powers.

Advertisement

In a brief filed Tuesday, U.S. Solicitor Gen. Noel Francisco agreed with the law firm that the CFPB’s structure is unconstitutional. But Francisco said the court should leave the bureau intact, and his brief left open the possibility that the CFPB could continue to press the investigation.

Francisco said the constitutional issue “has broad implications for the president’s ability to supervise the executive branch.“

The administration laid out its views on the CFPB for the Supreme Court last year but hadn’t previously urged the justices to put a case on its argument calendar.

The CFPB, set up after the 2008 financial crisis, regulates credit cards, auto loans and other consumer finance products. Supporters say its independence helps insulate it from political pressures, letting it focus on protecting consumers from financial scams and predatory loans. Critics say it has stifled economic growth through overregulation.

Advertisement

During most of Trump’s first year as president, the CFPB had a holdover director, Richard Cordray, who pressed an aggressive regulatory agenda. Cordray, a Democrat, stepped down in November 2017 to begin an unsuccessful campaign for governor of Ohio.

The current director, Kathy Kraninger, is a Trump appointee who was confirmed by the Senate in December 2018 by a 50-40 vote without any Democratic support.


Newsletter
Get our weekly California Inc. newsletter
Advertisement