The Washington PostDemocracy Dies in Darkness

Opinion Its director may now be subject to political winds, but the CFPB is here to stay

Protesters listening to a speech from Sen. Elizabeth Warren (D-Mass.) in front of the Consumer Financial Protection Bureau headquarters in Washington in 2017.
Protesters listening to a speech from Sen. Elizabeth Warren (D-Mass.) in front of the Consumer Financial Protection Bureau headquarters in Washington in 2017. (Mark Wilson/Getty Images)

THE CONSUMER Financial Protection Bureau “is here to stay,” was Sen. Elizabeth Warren’s (D-Mass.) succinct assessment of a Supreme Court ruling on a challenge to the CFPB’s constitutionality Monday. Her language was celebratory, given her role in helping create the CFPB under the 2010 Dodd-Frank law, and accurate, too. The court did find that Dodd-Frank violated the Constitution by insulating the CFPB director, a single appointee with sweeping powers and a five-year term, from removal by the president, except for difficult-to-prove “malfeasance, inefficiency or neglect of duty.” Yet the justices rejected much broader constitutional arguments, advanced by the business community and the Trump administration, that could have dismantled the agency.

The upshot is that the CFPB emerges with its authority to regulate payday lending, debt collection, mortgages and other pocketbook issues intact. And anything that does not kill a federal agency makes it stronger. Yes, CFPB leadership is now somewhat more subject to the winds of politics, which is not what Congress had in mind, but also not the end of the world in practical terms. At-will employment for the top official is the norm at, say, the Environmental Protection Agency. Indeed, there may actually be a benefit to this, in terms of political accountability, as Chief Justice John G. Roberts Jr.’s controlling opinion noted.

In an even more pragmatic sense, the ruling opens the way for former vice president Joe Biden, if elected in November, to fire and replace the acting CFPB director President Trump installed in 2018. The CFPB, to be sure, needs continuity and independence to stare down powerful financial lobbies, but it still has that in the form of a guaranteed funding source from the Federal Reserve, as opposed to appropriations.

More broadly, there was a certain scholastic quality to the arguments in the case about different formulas for ensuring any given agency’s balance between independence and accountability: The court found CFPB’s highly protected single-leader structure unconstitutional but would not necessarily have said the same about a multi-member commission. The fact is, the leaders of various executive branch entities where independence is at a premium, such as the FBI and the Federal Reserve, operate under a variety of rules. The FBI director serves a 10-year term — subject to presidential firing for any reason. The Federal Reserve chair serves a four-year term, subject to presidential firing “for cause,” a term that implies misconduct, not mere disagreement with the president — but which has, fortunately, yet to be tested.

The key variable, in practice, is a given White House’s appreciation for, and adherence to, democratic norms. Properly, President Bill Clinton fired FBI director William Sessions in 1993, over alleged ethics concerns, and, equally properly, Mr. Clinton left successor Louis Freeh in office despite the two men’s intense distrust of each other. Mr. Trump, by contrast, fired James B. Comey from the FBI, and has repeatedly hinted publicly that his toleration for Fed chair Jerome H. Powell hinges on interest-rate policy. In other words, even the most carefully crafted legislation, or constitutional doctrine, needs support from unwritten rules — and presidential respect for them.

Read more:

Richard Cordray: Why the CFPB’s loss at the Supreme Court is really a win

Richard Cordray: The Trump administration is trying to undermine the CFPB. It will fail.

George F. Will: A judicial rebuke for a heedless Congress?

Catherine Rampell: Why do Republicans hate consumers?