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Trump administration asks Supreme Court to take up challenge to consumer bureau

BY SYLVAN LANE - 09/17/19 05:29 PM EDT 75



The Trump administration and Consumer Financial Protection Bureau (CFPB) on Tuesday asked the Supreme Court to take up a lawsuit challenging the agency’s constitutionality.

Top Justice Department and CFPB attorneys argued in a brief filed Tuesday that the structure of the powerful financial watchdog infringes on the president’s executive authority.

The lawyers urged the Supreme Court to take up a case that could have potentially fatal implications for the CFPB, halting or weakening its efforts to police the financial sector.

“The structure of the Bureau, including the for-cause restriction on the removal of its single director, violates the Constitution’s separation of powers,” wrote the administration's attorneys, asking the Supreme Court to take up the lawsuit, Selia Law v. CFPB, from the 5th Circuit Court of Appeals.

The brief is the latest step taken by the Trump administration and Republicans to gut the CFPB and sideline what Democrats designed to be a powerful, independent financial regulator.

The CFPB was created by the Dodd-Frank Wall Street reform law and began overseeing banks and lenders in 2012. Under the leadership of former Director Richard Cordray, a Democrat, the bureau issued sweeping regulations and severe penalties to firms alleged to have harmed or abused consumers.

Republicans and financial industry advocates had long sought curb the CFPB’s power through lawsuits and legislation, insisting the agency and its leader had abused its excessive power.

CFPB critics argued that by making the bureau’s director fireable by the president only “for cause,” which is generally considered to be severe incompetence or misconduct, Dodd-Frank hindered the president’s authority over the executive branch.

The U.S. Court of Appeals for the District of Columbia Circuit ruled in 2016 that the controversial watchdog agency's structure was unconstitutional. But that decision, authored by eventual Supreme Court Justice Brett Kavanaugh, was overturned by the full court in 2018.

The CFPB remained largely insulated from GOP attacks until Cordray resigned in November 2017 to run for governor of Ohio. His departure allowed Trump to appoint Mick Mulvaney, now the White House chief of staff, as the CFPB’s acting director.

Mulvaney took sweeping steps to weaken the CFPB from within, delaying and cutting certain Cordray-era regulations, easing bureau oversight of the financial sector and devastating bureau morale.

Current CFPB Director Kathy Kraninger has taken a more moderate hold of the agency, though her support for making her position fireable by the president at will reflects the depth of GOP skepticism of its structure.