Removing Barriers Blog

SCOTUS Holds CFPB Structure Unconstitutional
Posted June 29, 2020 by CUNA Advocacy

The U.S. Supreme Court issued its decision in Seila Law v. CFPB, which challenged the constitutionality of the CFPB. CUNA filed an amicus brief calling on the Court to void the CFPB but provide Congress time to cure the constitutional defect by establishing a multi-member commission at the head of the Bureau.  

In the case, the Court considered two questions 1)  Whether the CFPB structure, an independent agency led by a single director only removable for cause, violates the separation of powers; and 2) Whether, if the CFPB structure is unconstitutional, can the “for cause” removal provision be severed from the Dodd-Frank Act.

In a 5-4 decision, the Court held that the CFPB’s structure violates the separation of powers. The Court, however, elected to sever the removal-protection provision from the other provisions of Dodd-Frank, leaving the CFPB standing but altered. Chief Justice John Roberts wrote in the opinion of the court, "[t]he agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will."

Justices Thomas and Gorsuch declined to join the severance portion of the Chief’s majority opinion. The four dissenting justices (Kagan, Ginsburg, Breyer, and Sotomayor) dissented on the constitutional question but concurred in the judgment on severability. 

The Court remanded the question of whether the civil investigative demand at the heart of the case was validly ratified.

CUNA filed an amicus brief calling on the Court to void the CFPB but provide Congress time to cure the constitutional defect by establishing a multi-member commission at the head of the Bureau.