WASHINGTON — The Supreme Court is stepping into a yearslong, politically charged fight over the federal consumer finance watchdog agency that was created in the wake of the 2008 financial crisis.
The justices agreed Friday to review an appeals court decision that upheld the structure of the Consumer Financial Protection Bureau. The agency has long been a target of conservative Republicans.
The Justice Department usually defends federal law. But the Trump administration agrees with a California law firm challenging the CFPB that the president should be able to fire the agency’s director for any reason.
The CFPB was created as an independent agency by the landmark Dodd-Frank law that overhauled the regulations governing Wall Street and banks in response to the financial crisis. The legislation, approved by a Democratic-led Congress and signed into law by President Barack Obama, says the director can only be fired for cause, including neglect of duty and not for political differences.
The CFPB has been swept up in partisan politics since its creation. Wall Street interests, the banking and consumer finance industries and Republicans in Congress have fiercely opposed and criticized the agency, accusing it of overreaching in its regulation. The agency was the brainchild of Democratic presidential candidate and Massachusetts Sen. Elizabeth Warren.
If the court agrees with the administration, a ruling could invalidate all the actions taken by agency. Or it could simply say that the president has a free hand in removing its director.
The latter course would limit the impact of the ruling, leaving the agency in place and freeing the next president to replace Trump’s CFPB director.
Appeals courts in Washington, D.C., and San Francisco have found that the CFPB’s structure doesn’t violate the Constitution and doesn’t prevent the president from performing his
The agency has taken legal action against banks, mortgage companies, credit card issuers, payday lenders, debt collectors and others, recovering $13.2 billion for more than 35 million harmed consumers. It has handled nearly 2 million complaints from consumers.
Richard Cordray, Obama’s CFPB director, stepped down to mount an unsuccessful bid to be Ohio’s governor. Trump first named Mick Mulvaney, now the acting White House chief of staff, as the agency’s acting director. The Senate confirmed the current director, Kathy Kraninger, on a 50-49 party-line vote.
The Associated Press