Supreme Court Weighs Fate Of CFPB, Other Independent Agencies In the short run, the fate of the Consumer Financial Protection Bureau hangs in the balance. In the long run, the future of independent regulatory agencies are at stake.
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Supreme Court Eyes The President's Power To Say 'You're Fired!'

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Supreme Court Eyes The President's Power To Say 'You're Fired!'


Supreme Court Eyes The President's Power To Say 'You're Fired!'

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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At the Supreme Court today, the Trump administration is trying to make it easier for the president to replace the heads of the country's independent regulatory agencies. The administration is asking the court to restrict or reverse a decision that dates back more than 80 years. NPR legal affairs correspondent Nina Totenberg reports.

NINA TOTENBERG, BYLINE: In 2008, the U.S. economy was on the brink of financial disaster.


UNIDENTIFIED REPORTER #1: A rising number of homeowners, quite simply, can't pay their mortgages. Foreclosures have hit a record high.

BILL WEIR: The National Association of Realtors reported the worst month-to-month drop in existing home sales since they started keeping track in the late '90s.

UNIDENTIFIED REPORTER #2: And a further meltdown in the mortgage market had investors heading for the exits.

TOTENBERG: In 2009, Congress sought to re-establish oversight and regulation of the financial system. Among the remedies enacted was a law that consolidated powers from across seven agencies into one, called the Consumer Financial Protection Bureau. It was placed in the offices of the Federal Reserve and funded by the Fed. The new agency was charged with preventing a repeat of the 2008 financial crisis. Richard Cordray was its first director.

RICHARD CORDRAY: So the CFPB had two roles. One was to try to prevent an economic collapse of that kind ever happening again. And that was done largely through putting in place rules that safeguarded the mortgage market and ferreted out a lot of the irresponsible and ultimately failed lending that had occurred.

TOTENBERG: Once in place, the bureau moved aggressively to protect consumers from bad actors in banking and other financial services. Also in the CFPB's sights were bill collectors, telemarketers and others accused of misleading practices. Among these was the Seila Law firm in Los Angeles - investigated for charging consumers illegal upfront fees for debt-relief services.

The CFPB, as part of its investigation, demanded certain documents from the law firm. The firm refused, contending that the structure of the agency is unconstitutional because its director cannot be fired by the president at will. Instead, the bureau's director, like the heads of other independent federal agencies, can only be fired for cause - meaning malfeasance, inefficiency or neglect of duty. Lawyer Andy Pincus, who represents the Chamber of Commerce, explains.

ANDY PINCUS: The theory of our government is that the popularly elected president will appoint officials and remove them if they're not doing what he wants. So if you take away the president's power to remove someone, then you're drastically limiting the political accountability of that individual.

TOTENBERG: That view, however, lost in the lower courts, and the Seila firm appealed to the Supreme Court, backed by the Trump administration.

Central to today's argument is a case dating back to 1935, when President Franklin Delano Roosevelt tried to fire one of five commissioners on the Federal Trade Commission over his policy views. The Supreme Court ruled unanimously that Congress created the FTC to perform quasi-judicial, quasi-legislative functions and that the president could not, therefore, dismiss its members the way he could members of his own administration.

The Seila Law firm and the Trump administration will argue that the CFPB is different because the bureau's power was placed in the hands of a single director instead of a multi-member commission. Again, lawyer Andy Pincus.

PINCUS: Multi-member agencies, the way they're structured in our system, have to have people from different parties. The president picks the chairman, who has a lot of control about how it operates. The terms are staggered, so most presidents will have an opportunity to appoint a number of those people.

TOTENBERG: Because the Trump administration is not defending the CFPB structure, the Supreme Court appointed lawyer Paul Clement to argue on behalf of the bureau. Clement notes that there are other single-member directors at the government who cannot be fired by the president at will, among them the comptroller of the currency and the director of the Social Security Administration.

The Constitution says nothing about the president's power to remove officers confirmed by the Senate. Pointing to that fact, Clement notes there are literally dozens of independent agencies that control everything from monetary policy, to the stock market, to public health and safety. Clement says that the consequences of invalidating the CFPB structure could be dire.

PAUL CLEMENT: The issue, in this case, is like the thread on the sweater. That if you start tugging on it, and you tug on it hard enough, potentially the whole sweater comes undone. And the sweater here, really, is the entirety of the whole alphabet soup of agencies that all have these for-cause protections.

TOTENBERG: These agencies, he notes, are often central to our economy.

CLEMENT: The Federal Reserve is a great sort of example of why Congress imposes these kind of restrictions because there are certain issues in the world, that we deal with at the national level, where it's nice to have a degree of insulation for discharging a particular duty where it's not going to just change with whoever is the president.

TOTENBERG: The Trump administration, however, is willing to roll the dice in this case. It argues that if a single-director agency cannot be distinguished from a multi-member agency, the court should reverse the case decided 85 years ago. That would throw into doubt not just the CFPB but independent agencies that comprise roughly a third of the government - and not just those agencies but also, potentially, the rules that those agencies have laid down over the years.

Richard Cordray, the former CFPB director, says that even a ruling limited to the CFPB could have unintended consequences.

CORDRAY: Notably, in the case that's being argued on Tuesday, the Mortgage Bankers Association filed a brief saying whatever you do, don't strike down the agency as a whole because it would cause chaos in the mortgage market. The rules that are in place, we've all adjusted to those. Those are working well.

TOTENBERG: The Supreme Court majority likely would want to avoid that kind of chaos. But the conservative court majority is comprised of five justices who, to one degree or another, have indicated a hostility to the notion of independent agencies. The question now is, how far do they want to go?

Nina Totenberg, NPR News, Washington.

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