The question – can a President remove the Director of Consumer Financial Protection Bureau (CFPB) ‘just because’?

The answer – yes.  But then it gets a little more complicated.  The bottom line – The director of the CFPB is exposed to the whim of a president who wants everyone to do their bidding, no matter the consequences to the consumer.  If the president cares about you and me more than big business, that is good.  But, if the president cares more about big business than you and me, that is bad.  The goods news – CFPB is still alive and kicking.  For those late to the party – the CFPB is one of the few organizations designed to protect you and me (the consumer).

The CFPB core functions:

According to the CFPB website, the CFPB was created to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. Before, that responsibility was divided among several agencies. Today, it’s our primary focus.

Our work includes:

  • Rooting out unfair, deceptive, or abusive acts or practices by writing rules, supervising companies, and enforcing the law
  • Enforcing laws that outlaw discrimination in consumer finance
  • Taking consumer complaints
  • Enhancing financial education
  • Researching the consumer experience of using financial products
  • Monitoring financial markets for new risks to consumers

Sheila Law v. CFPB: Winners and Losers (a reprint from Credit Slips) July, 2020

posted by Adam Levitin (see some great quotes at the end of Mr. Levitin’s entire post – ‘Read More’)

CFPBThe Supreme Court’s long-awaited decision about the CFPB’s constitutionality is out. It’s a tricky opinion to parse politically. The Court, in a 5-4 partisan decision, held that the CFPB’s structure violates the separation of powers because of the for-cause only removal provision for the CFPB Director in conjunction with the Bureau’s other features. Accordingly, the Court found that the Director must be removable at will. Here’s my attempt to lay out the winners and losers. As you’ll see, they do not track with the headlines of the CFPB losing—the CFPB was actually the winner here for most purposes. 

Winner:  The CFPB

The CFPB walks away from Seila Law still standing tall and able to do everything it could the day before the decision. Don’t lose sight of that. You can see this in part by counting the votes. While it was 5-4 (with conservatives in the majority) that the CFPB is unconstitutional, it was 5-4 (liberals + Roberts) on the severability issue, which keeps the agency alive. While the case was a tactical loss for the CFPB, it was actually a strategic victory. If there’s one big picture take away, that’s it. The CFPB functionally won here.  

Winner:  A Biden Administration

The most immediate practical effect of the decision is that a President Biden can fire CFPB Director Kraninger on Day One of his administration. That’s a good thing for those who want to see a more active CFPB right now. In the short term, the Supreme Court might have given a Biden administration a real gift. Indeed, I found it very strange to see the Kraninger CFPB send out an email scheduling an event for March 2021. That might be optimistic in light of the decision. 

Possible Loser:  CFPB Independence 

cfpbWhile the CFPB did score a general win, the decision might affect how the CFPB behaves in the future. The lack of a for-cause-only removal protection might have a chilling effect on future CFPB Directors. If a future CFPB Director is too aggressive, the financial services industry will surely lobby the President to fire the Director. Whether the industry will have enough pull with a future administration to actually get a Director removed or for the White House to get involved is far from certain, however. In other words, the trade-off here is that there’s a possibility of putting in a more active Director in January 2020, but that such Director and any future Director will face a political constraint of some type going forward. 

CFPB

MUSINGS FROM DIANE:

Politics and politicians can be bullies.  “Bullying is the use of force, coercion, or threat, to abuse, aggressively dominate or intimidate. The behavior is often repeated and habitual.” (Wikipedia).  As soon as Trump got in the White House he started attacking the CFPB.  Why you ask?  Because he is not a champion of consumer rights (don’t trust me – look at his history).  The CFPB was born out of a group, lead by Elizabeth Warren, who were tired of consumers (that you and me) getting ripped off by big business – such as banks, mortgage companies, credit card companies, payday lenders, shady student loan companies, etc.  Richard Cordray was the first Director (under Obama), later Trump put his own shills in as directors –  Mick Mulvaney (as Acting Director), then Kathleen Kraninger.
From its creation until 2017, the CFPB “has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts.”