The Supreme Court Lets the President Fire the Country’s Top Wall Street Watchdog

The president can now dismiss the head of the Consumer Financial Protection Bureau at will.

Stefani Reynolds/Zuma

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.

The Supreme Court on Monday dealt a blow to the independence of the Consumer Financial Protection Bureau, created on the heels of the 2008 recession to go after abusive financial actors.

In a 5–4 ruling, the conservative justices, led by Chief Justice John Roberts, struck down the part of the agency’s structure limiting the president’s ability to fire the CFPB director. The ruling allows the president to fire the director of the CFPB at will, and it could have implications for other independent federal agencies.

But the court declined to declare the entire agency unconstitutional, as requested by the plaintiff in the case, a debt relief firm called Seila Law that was under investigation by the CFPB. The agency can continue to operate, Roberts wrote, but its Director, in light of our decision, must be removable by the President at will.”

The CFPB was established in 2011 with the goal of cracking down on the abusive practices in the banking and financial sectors that precipitated the crisis. The legislation that created the body stipulated that its director, nominated by the president and confirmed by the Senate, would serve a five-year term and could only be fired by the president “for cause”—specifically, “inefficiency, neglect of duty, or malfeasance in office.” Members of the multi-person boards leading the Federal Reserve, the Securities and Exchange Commission, the Federal Communications Commission, and many other agencies are subject to the same “for cause” firing limitation, to protect those agencies’ independence.  

It wasn’t clear from Monday’s ruling the extent to which this decision to give the president more power over the CFPB’s leadership could be applied to other agencies’ directors and board members. But ever since the case was heard in court in March, advocates and lawyers have argued that a ruling striking down the CFPB’s directorship structure could poke holes in these other agencies’ independence.

Following Monday’s ruling, University of Texas law professor Stephen Vladeck tweeted that the ruling is “a very big deal for the separation of powers insofar as it makes it harder to have ‘independent’ Executive Branch agencies.”

It is unlikely that President Trump will fire the CFPB director, Kathleen Kraninger, anytime soon; she was nominated by Trump and confirmed by the Senate in 2018.

The ruling could actually end up being a boon for Democrats. Should Joe Biden win the presidency in November, he would be able to replace Kraninger before the end of her five-year term. As the director of the CFPB, Kraninger has herself argued that the established CFPB structure gives her too much independence and should be ruled unconstitutional. 

You can read the full Supreme Court ruling below:

 

REAL QUICK, REAL URGENT

Minority rule, corruption, disinformation, attacks on those who dare tell the truth: There is a direct line from what's happening in Russia and Ukraine to what's happening here at home. And that's what MoJo's Monika Bauerlein writes about in "Their Fight Is Our Fight" to unpack the information war we find ourselves in and share a few examples to show why the power of independent, reader-supported journalism is such a threat to authoritarians.

Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

payment methods

REAL QUICK, REAL URGENT

Minority rule, corruption, disinformation, attacks on those who dare tell the truth: There is a direct line from what's happening in Russia and Ukraine to what's happening here at home. And that's what MoJo's Monika Bauerlein writes about in "Their Fight Is Our Fight" to unpack the information war we find ourselves in and share a few examples to show why the power of independent, reader-supported journalism is such a threat to authoritarians.

Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate