Editor: David Reiss
Brooklyn Law School

February 1, 2018

An Independent CFPB

By David Reiss

Baron de Montesquieu, a proponent of the tripartite system of government

The United States Court of Appeals for the District of Columbia, sitting en banc, upheld the constitutionality of the structure of the Consumer Financial Protection Bureau in PHH Corporation v. CFPB, No. 15-1177 (Jan. 31, 2018). There has been a lot reporting around this lengthy decision (there are 7 opinions, totaling 250 pages). And certainly, its fate in the Supreme Court is still up for grabs. Personally, I found the following passage from the majority opinion interesting:

There is nothing constitutionally suspect about the CFPB’s leadership structure. … there is no reason to assume an agency headed by an individual will be less responsive to presidential supervision than one headed by a group. It is surely more difficult to fire and replace several people than one. And, if anything, the Bureau’s consolidation of regulatory authority that had been shared among many separate independent agencies allows the President more efficiently to oversee the faithful execution of consumer protection laws. Decisional responsibility is clear now that there is one, publicly identifiable face of the CFPB who stands to account—to the President, the Congress, and the people— for all its consumer protection actions. The fact that the Director stands alone atop the agency means he cannot avoid scrutiny through finger-pointing, buck-passing, or sheer anonymity. What is more, in choosing a replacement, the President is unhampered by partisan balance or ex-officio requirements; the successor replaces the agency’s leadership wholesale. Nothing about the CFPB stands out to give us pause that it—distinct from other financial regulators or independent agencies more generally—is constitutionally defective. (35)

While this is of great consequence for the CFPB and its role in the regulation of the financial sector, it also has great consequence as a matter of separation of powers doctrine. The DC Circuit is giving Congress a lot of discretion in organizing the modern Administrative State. It is up to Congress to exercise that discretion responsibly.



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