The US Supreme Court ruled Monday in Seila Law LLC. v. Consumer Financial Protection Bureau that the leadership structure of the Consumer Financial Protection Bureau (CFPB) violates the separation of powers.
The case began when the CFPB ordered Seila Law to disclose business practices with a civil investigative demand in 2017. Seila Law refused to comply with the demand, alleging that the CFPB’s structure was unconstitutional.
Congress created the CFPB with the Dodd–Frank Wall Street Reform and Consumer Protection Act following the 2008 recession. Unlike most agencies led by multimember boards or commissions, the CFPB leader is a single director appointed by the president for a five-year term. The director is only removable by the president for “inefficiency, neglect of duty, or malfeasance in office.”
The majority held in this case that the structure of this agency is contrary to the Constitution’s general opposition to concentrating power in a single person. Ultimately, they determined that the limited grounds for removing the director violate the president’s power of removal. It thus vacated the judgment of the Ninth Circuit Court and remanded the case for further proceedings.