by Courtney M. Dankworth, Mary Beth Hogan, Gregory J. Lyons, Erol Gulay, David Imamura, Alexandra N. Mogul, and Victoria L. Recalde
On June 29, 2020, the Supreme Court issued its decision in Seila Law LLC v. Consumer Financial Protection Bureau, finding unconstitutional the Consumer Financial Protection Bureau’s (the “CFPB” or “Bureau”) leadership structure in which a single director is removable by the President only for cause. This “for cause” limitation on the President’s removal powers by the authors of Dodd-Frank made the CFPB leader more independent than the leaders of other executive agencies. In addition, given the CFPB Director’s five year term, a CFPB Director appointed by one President could remain in office well into the tenure of the next.
The Supreme Court’s decision in Seila eliminates this “for cause” protection, ending the CFPB’s insulated political status and opening up the CFPB to leadership change when a new President takes office. This decision will have a narrow immediate impact, since the CFPB is currently headed by an appointee of President Trump, but will have greater meaning if former Vice President Joe Biden wins the presidency in the fall. More generally, the decision will lead to a CFPB that is more closely aligned with the political priorities of whichever administration is in power.