Consumer bureau chief explains support for lawsuit limiting her power

Consumer bureau chief explains support for lawsuit limiting her power
© Greg Nash

The director of a powerful financial watchdog said Thursday that she asked the Supreme Court to strip her immunity from being fired without cause by President TrumpDonald John TrumpTrump passes Pence a dangerous buck Overnight Health Care — Presented by American Health Care Association — Trump taps Pence to lead coronavirus response | Trump accuses Pelosi of trying to create panic | CDC confirms case of 'unknown' origin | Schumer wants .5 billion in emergency funds Trump nods at reputation as germaphobe during coronavirus briefing: 'I try to bail out as much as possible' after sneezes MORE to settle “uncertainty” lingering over the agency.

Kathy Kraninger, director of the Consumer Financial Protection Bureau (CFPB), said Thursday that she is supporting a legal challenge to the bureau before the Supreme Court in order to resolve questions about the agency’s structure.

The Supreme Court is set to hear arguments in March on Seila Law v. CFPB, a lawsuit that accuses the bureau of being unconstitutional because it infringes upon the president's authority.


Kraninger and the Trump administration filed a brief in September asking the Supreme Court to strip a provision from the Dodd-Frank Act, which created the CFPB, that protects her from being fired at-will by the president.

Under Dodd-Frank, the president may only fire the CFPB director “for cause,” which is generally understood to be misconduct or incompetence.

“Congress obviously provided a clear mission for this agency, but there are some questions around this and I want the uncertainty to be resolved,” Kraninger said in testimony before the House Financial Services Committee.

“I would very much like to see a resolution on this question because it has hampered the CFPB and its ability to carry out its mission virtually since its inception.”

The financial services industry and its allies in Congress have sought to curb the CFPB’s immense power and independence since the agency opened in 2011. Designed by Sen. Elizabeth WarrenElizabeth Ann WarrenBiden looks to shore up lead in S.C. Hillicon Valley: Dems cancel surveillance vote after pushback to amendments | Facebook to ban certain coronavirus ads | Lawmakers grill online ticketing execs | Hacker accessed facial recognition company's database Push for national popular vote movement gets boost from conservatives MORE (D-Mass.), the CFPB was created to regulate and investigate banks, lenders and credit card companies for abusive and fraudulent practices.


Under former Director Richard CordrayRichard Adams CordrayTo understand true impact of proposed interest rate caps, listen to history and borrowers Democrats blast consumer bureau over student loan oversight agreement with DeVos Consumer bureau chief explains support for lawsuit limiting her power MORE (D), the CFPB wrote strict regulations and pursued probes of firms they suspected of violating consumer protection laws. When the CFPB asked Seila Law in 2017 to provide information about its sale of debt relief services, the firm rejected the bureau’s request and claimed it lacked the legal authority to do so.

After a district court ruled in favor of the CFPB and the 9th Circuit Court of Appeals upheld that ruling, Seila Law appealed the case to the Supreme Court, which agreed in October to take up the case.

Democratic lawmakers and consumer groups have urged the Supreme Court to rule against Seila Law and fear that right-leaning justices could shut down the entire agency. Even so, Seila Law and the Trump administration have asked the Supreme Court to settle the constitutional issue by making the CFPB director fireable at will.

A panel of the District of Columbia Circuit Court of Appeals ruled in a similar 2016 case that the CFPB’s structure violated the Constitution as long as the director could only be fired for cause. 

But the full circuit court reversed that decision, authored by eventual Supreme Court Justice Brett KavanaughBrett Michael Kavanaugh70 former senators propose bipartisan caucus for incumbents Justices bar Mexican parents from suing over fatal cross-border shooting of teen Supreme Court upholds death sentence for Arizona man MORE, in 2018, clearing the CFPB’s structure.