That’s the title of a blog post in which Stephen Bainbridge discusses the D.C. Circuit’s recent ruling against the Consumer Financial Protection Bureau. In the course of his discussion Prof. Bainbridge provides links to several peices about the decision that appeared in the Wall Street Journal. In the first of these the Journal reports that:
A federal appeals court delivered a strong rebuke to the government’s new consumer-finance watchdog, declaring the agency’s unusual independence to be unconstitutional, and ordering its powers be curbed. …
If it stands, the decision from the U.S. Court of Appeals for the District of Columbia would reduce the agency’s independence, empowering the White House to supervise the agency and remove its director, in contrast to the current arrangement where the director’s five-year term is intended to outlast a president’s. …
In Tuesday’s ruling by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, Judge Brett Kavanaugh, a George W. Bush appointee, wrote that Congress gave the CFPB director “more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president.” He said the problem of checks and balances was particularly acute because the CFPB “possesses enormous power over American business, American consumers and the overall U.S. economy.”
Bainbridge also links to a WSJ op-ed by Thomas Boyd:
The federal Consumer Financial Protection Bureau wasn’t declared unconstitutional on Tuesday, as many conservatives had hoped. But a split decision from the U.S. Court of Appeals for the D.C. Circuit has put an important political check on the agency by making its director accountable to the White House. It was a partial victory for constitutional principles. …
The Dodd-Frank legislation placed virtually all of the CFPB’s executive power in a single director, appointed to a five-year term by the president and confirmed by the Senate. This was a novel structure for a regulatory agency. Historically, independent federal agencies have been managed by multi-member commissions, often with bipartisan representation. For example the Federal Communications Commission and the Securities and Exchange Commission follow that pattern.
Even more troubling, the CFPB’s director was shielded from normal executive-branch checks and balances. The law specified that he could not be fired, not even by the president, and could be removed only for cause, defined in the statute as “inefficiency, neglect of duty, or malfeasance in office.” Advocates of the statute, including now-Sen. Elizabeth Warren (D., Mass.), wanted the bureau and its director to be immune from political oversight—by Congress or even by the president.
On Tuesday a panel of the U.S. Court of Appeals for the D.C. Circuit held that this structure is unconstitutional. “Other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power,” wrote Judge Brett Kavanaugh for the 2-1 majority. “That is not an overstatement.”
He added that this agency, led by a single director who cannot be fired, is “the first of its kind and a historical anomaly.” As such, the CFPB “lacks the critical internal check on arbitrary decision-making, and poses a far greater threat to individual liberty.” Judge Kavanaugh, joined by Judge A. Raymond Randolph, declared that the power vested in the agency’s director violated the Constitution’s Separation of Powers Doctrine.
And to a WSJ editorial:
Some of us hoped the court would find the entire CFPB unconstitutional, but the ruling highlights again what a rush job Dodd-Frank was. Then professor and now Senator Elizabeth Warren proposed the consumer agency as a multi-member commission. So did the White House. But late in the game the bureau’s director became an unconstitutional authority unto himself. Ms. Warren sniffed in reaction to the ruling that it is merely a “technical tweak” that would be overturned on appeal, which shows how much contempt for the Constitution progressive elites now have.
If Congress won’t kill the CFPB, then it should at least make it conform to the normal constraints on independent federal agencies. And if Donald Trump wins, he should fire Mr. Cordray immediately.
