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Opening Arguments Set to Begin in CFPB Court Case

The Supreme Court will hear opening arguments on Tuesday in the case over whether the Consumer Financial Protection Bureau (CFPB) is constitutionally structured. 

The CFPB was established following the Great Recession. CNBC reports that a decision in the case is expected by the end of June. 

CNBC states that dispute arose over whether the CFPB’s director was given too much independence. According to the 2010 Dodd-Frank Act, which established the Bureau, the CFPB is led by a single director who may be removed by the president from their five-year term only for “inefficiency, neglect of duty, or malfeasance in office.” 

Current Democratic Presidential candidate Sen. Elizabeth Warren (D-Massachusetts) envisioned the CFPB during her time as a professor at Harvard Law School. The CFPB was designed to rein in abusive practices in consumer credit marks, such as home mortgages and credit cards. CNBC states it returned $12 billion to consumers between 2011 and 2017 but stopped pursuing enforcement actions under President Donald Trump. 

The CFPB has been the subject of several lawsuits, most recently by the California-based Seila Law. Seila Law alleges the CFPB’s insulation from presidential control is unconstitutional. The law firm challenged the agency after the CFPB targeted the firm 2017, CNBC states. 

Caren Castle, an attorney with the Wolf Firm, told MReport she doesn’t expect to see anything “earth shattering” on Tuesday, and those opening arguments will not “truly influence” the Justices; inclination on how to they plan to rule. 

“I think the more interesting issue will be to see if the Court gives us any indication that they are leaning towards finding the entire CFPB unconstitutional or perhaps wants to enter a more limited decision which would only address the constitutionality of certain provisions such as the singular head of the Bureau,” Castle said. 

Castle said if the Supreme Court upholds the current structure, which she believes in unlikely, then the head of the CFPB will have a measure of independence from the current administration as well as future administrations. 

“However, if the court rules that the head of the CFPB serves at the pleasure of the President, then CFPB will become much more political and will be fashioned by whatever administration is in power,” Castle said. 

Castle added the weakening of the CFPB provided an excuse for states to create their own CFPB—a measure California has already done

“This decision could have far-reaching ramifications as to other bodies such as FDIC which similarly have limitations on the termination of the head of those bodies,” she said. “An overly broad decision may have consequences to those bodies as well.”

According to American Enterprise Institute Senior Fellow Peter J. Wallison, there is more at stake than just the constitutionality of the Bureau.

On Real Clear Politics, Wallison argues that this CFPB case is an example of Congress enacting “broadly  phrased laws, essentially delegating the key legislative choices to administrative agencies and violating the Framers’ constitutional plan of separation.”

In addition to the Seila Law lawsuit, a lawsuit was filed in the U.S. District Court for the Southern District of New York by The New Civil Liberties Alliance (NCLA), alleging that Congress unlawfully divested its legislative appropriations power when it gave CFPB the ability to draw funding directly from the Federal Reserve, without annual appropriations from Congress and without oversight from the appropriations committees of Congress.

“This case, entitled Law Offices of Crystal Moroney v. Bureau of Consumer Financial Protection, may ultimately provide the U.S. Supreme Court the opportunity to revive the Non-delegation Doctrine that five justices expressed interest in revisiting earlier this year in the wake of last June’s Gundy v. United States decision,” NCLA said.

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.

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