White House Wants Authority To Fire Consumer Protection Chief

Image courtesy of Adam Fagen

While the heads of most federal agencies have been replaced since the new administration moved into the White House, Richard Cordray remains Director of the Consumer Financial Protection Bureau. That’s because President Trump currently can’t fire him without having to first show cause — a requirement the White House wants to get rid of.

Not all of you have been following this legal dispute, so here’s a quick background: Unlike most — but not all — agencies with a single Director, the CFPB’s head can’t be removed at the President’s whim. Last year, as part of a lawsuit brought by mortgage company PHH Corp., a three-judge panel at the D.C. Circuit Court of Appeals ruled that this structure is unconstitutional.

The CFPB has successfully petitioned the full D.C. appeals court to rehear the case, arguing that there is nothing in the Constitution or in case law requiring that the head of an independent federal agency can be fired at will by the President without cause. The Bureau and its supporters point out that the Social Security Administration, Office of the Special Counsel, and the Federal Housing Finance Agency each have similar structures. And, like CFPB’s Cordray, Special Counsel Carolyn Lerner and FHFA Director Mel Watt have not been replaced since Trump took office.

On Friday, the Justice Department — which only three months ago defended the CFPB’s structure — filed an amicus brief [PDF] now arguing that the President should be able to get rid of a Bureau Directors without having to show cause.

“[B]ecause a single agency head is unchecked by the constraints of group decision-making among members appointed by different Presidents, there is a greater risk that an ‘independent’ agency headed by a single person will engage in extreme departures from the President’s executive policy,” explains the brief.

Though the Constitution has nothing to say regarding the structure of independent federal agencies, the DOJ now contends that the document does specify that the President is the one wielding ultimate authority in the Executive branch. The brief argues that legal precedent protecting federal agency heads does not apply “when Congress carves off a portion of that quintessentially executive power and vests it in a single principal officer below the President who is not subject to the President’s control.”

Oral arguments in this rehearing are currently scheduled for May 24. Regardless of how the full D.C. Circuit rules, it is likely the U.S. Supreme Court will be asked to make the final decision in this dispute.

If so, things could get a bit complicated. The CFPB represents itself in court through the appeals court level. If a case involving the Bureau goes before the Supremes, it is supposed to be represented by the U.S. Solicitor General, whose office wrote the brief submitted on Friday. A number of state attorneys general and advocacy organizations have expressed interest in intervening on the CFPB’s behalf should the Bureau need representation.

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