House leaders ask Supreme Court to reject Trump challenge to consumer bureau

The Democratic-led House of Representatives filed a brief late Monday night asking the Supreme Court to reject a challenge to the Consumer Financial Protection Bureau’s (CFPB) constitutionality.

The House filed a brief Monday opposing a request for the Supreme Court to take up a case from the 9th Circuit Court of Appeals arguing that the structure of the CFPB, a powerful financial regulator, infringes on the president’s executive authority.

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The Court of Appeals ruled in favor of the agency against Seila Law, a law firm that refused to comply with a CFPB request for documents related to an enforcement action.

The appeals court upheld a district court’s rejection of Seila’s argument that claimed the CFPB was unconstitutional. 

Seila has since asked the Supreme Court to take up the case, but the high court did not add it to the docket for its upcoming October term. Even so, the House seeks to kill the request after the Trump administration announced last month it would not defend the CFPB’s structure before the Supreme Court.

“By not defending the Consumer Bureau’s independence, the Trump Administration is choosing special interests over America’s consumers,” said House Speaker Nancy PelosiNancy PelosiOn The Money: Breaking down the June jobs report | The biggest threats facing the recovery | What will the next stimulus bill include? Military bases should not be renamed, we must move forward in the spirit of reconciliation Pelosi: Trump 'himself is a hoax' MORE (D-Calif.) in a Monday statement.

The CFPB has been a consistent partisan flashpoint since it opened in 2012.

Designed by Sen. Elizabeth WarrenElizabeth WarrenThe Hill's Campaign Report: Biden chips away at Trump's fundraising advantage Warnock raises almost M in Georgia Senate race in second quarter The Hill's Morning Report - Trump lays low as approval hits 18-month low MORE (D-Mass.) and enacted through the 2010 Dodd-Frank Wall Street reform law, the agency was created by Democrats to police banks and lenders for fraud and abuse of their customers.

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 illegally impeded the president’s control over the executive branch.

The U.S. Court of Appeals for the District of Columbia Circuit ruled in 2016 that the CFPB’s structure was unconstitutional. But that decision, authored by eventual Supreme Court Justice Brett KavanaughBrett Michael KavanaughKavanaugh rejects Illinois GOP request to block rule banning large gatherings McGrath fends off Booker to win Kentucky Senate primary Trump's mark on federal courts could last decades MORE, was overturned by the full court in 2018.

The House brief asked the Supreme Court to abide by D.C. Circuit ruling to protect the CFPB, arguing that the president has ample authority to fire the bureau’s director if she or he is not enforcing the law.

The brief also noted that because the CFPB is controlled by a single director, the president wields significant power over the agency by choosing who leads it.

“Indeed, where an agency is headed by a single individual, the lines of Executive accountability—and Presidential control—are even more direct than in a multi-member agency,” the House argued. 

“If the President determines that the CFPB Director is failing in her duty to enforce the consumer protection laws, the President can remove and replace the Director.”

The CFPB issued several sweeping regulations and pursued aggressive lawsuits under former director Richard CordrayRichard Adams CordraySupreme Court ruling could unleash new legal challenges to consumer bureau Supreme Court rules consumer bureau director can be fired at will Poll: Biden, Trump neck and neck in Ohio MORE, a Democrat. While Republican and industry critics of the CFPB failed to curb the agency, President TrumpDonald John TrumpProtesters tear down statue of Christopher Columbus in Baltimore 'Independence Day' star Bill Pullman urges Americans to wear a 'freedom mask' in July 4 PSA Protesters burn American flag outside White House after Trump's July Fourth address MORE’s 2016 election cleared a path to transform the bureau.

When Cordray resigned in November 2018, Trump appointed Mick MulvaneyMick MulvaneySupreme Court ruling could unleash new legal challenges to consumer bureau Bottom line White House goes through dizzying change in staff MORE, then the White House budget director, to lead the bureau on an acting basis. Mulvaney was replaced in December 2018 by Kathy Kraninger, who backed the CFPB’s decision not to defend its structure before the Supreme Court.

Trump’s appointments of Kavanaugh and Neil GorsuchNeil GorsuchThe five biggest cases awaiting Supreme Court decisions Supreme Court hands win to religious schools Trump's mark on federal courts could last decades MORE to the Supreme Court have also raised fears among the CFPB’s defenders that the court could move to gut or even eliminate the bureau. 

“Despite previous court rulings that made it clear that the Consumer Bureau is constitutional and here to stay, Kathy Kraninger insists on working to undermine and politicize the agency at the expense of hardworking Americans,” said Rep. Maxine WatersMaxine Moore WatersOn The Money: Mnuchin, Powell differ over how soon economy will recover | Millions fear eviction without more aid from Congress | IRS chief pledges to work on tax code's role in racial wealth disparities Millions fear eviction without more aid from Congress House approves statehood for DC in 232-180 vote MORE (D-Calif.), chairwoman of the House Financial Services Committee, which oversees the CFPB. 

“This is yet another example of a Trump Administration appointee working to undermine the mission of the agency they were appointed to lead.”

Kraninger is scheduled to testify Oct. 16 before the Financial Services Committee.