Despite a Supreme Court decision that stripped the Consumer Financial Protection Bureau of some of its independence, Sen. Elizabeth Warren says her brainchild agency is \u201chere \u2026<\/b>
\nDespite a Supreme Court decision that stripped the Consumer Financial Protection Bureau of some of its independence, Sen. Elizabeth Warren says her brainchild agency is \u201chere to stay.\u201d
The Massachusetts senator took to Twitter to respond Monday to the top federal court\u2019s ruling that the CFPB\u2019s director could be fired by the president without cause. Previously, the director, who is appointed by the president for a five-year term, could only be removed for \u201cinefficiency, neglect of duty, or malfeasance in office,\u201d so that the independent federal agency would be shielded from political pressure.
In a 5-4 decision Monday, the conservative-led Supreme Court sided with a California law firm that sued in response to a CFPB investigation, arguing the financial watchdog\u2019s structure is \u201cunconstitutional.\u201d The decision means that the president can now fire the CFPB\u2019s director \u201cat will\u201d or, in other words, for basically any reason.
However, the court stopped short of more sweeping action, such as weakening its enforcement abilities or even abolishing the CFPB altogether, which has been a goal of many Republicans and the banking industry.
\u201cLet\u2019s not lose sight of the bigger picture: after years of industry attacks and GOP opposition, a conservative Supreme Court recognized what we all knew: the @CFPB itself and the law that created it is constitutional,\u201d Warren tweeted Monday.
While the Cambridge Democrat said the Supreme Court\u2019s ruling \u201chanded over more power to Wall Street\u2019s army of lawyers and lobbyists to push out a director who fights for the American people,\u201d she noted that the CFPB remains an \u201cindependent agency\u201d \u2014 as opposed to the \u201cmouthful of mush\u201d she had fiercely opposed a decade ago.
\u201cThe director of that agency still works for the American people,\u201d Warren wrote Monday. \u201cNot Donald Trump. Not Congress. Not the banking industry. Nothing in the Supreme Court ruling changes that.\u201d
Warren first proposed a CFPB-like agency \u2014 created to crack down on predatory practices in the mortgage, loan, and credit card industries \u2014 as a Harvard Law School professor in a 2007 journal article. Following the economic crisis, she helped bring the idea to fruition in 2010 as part of the Dodd-Frank financial reform law \u2014 after a bitter fight with Wall Street, Republicans, and even some Democrats (it was only after Warren did not get nominated to lead the agency that she ran for Senate).
\u201cMy first choice is a strong consumer agency,\u201d Warren told the HuffPost at the time, outlining her opposition to a CFPB with less independence. \u201cMy second choice is no agency at all and plenty of blood and teeth left on the floor.\u201d
The decision Monday, written by Supreme Court Chief Justice John Roberts, ruled that the agency had too much independence. Though the court had previously ruled that agencies led by a group of commissioners could be shielded from presidential removal without cause, Roberts wrote that those precedents did not apply to an independent agency with a single director and that the CFPB\u2019s structure violated the separation of powers.
\u201cSuch an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control,\u201d wrote Roberts, who also sided with the court\u2019s liberal justices in a separate abortion case Monday.
At the same time, Roberts declined to grant the petitioner\u2019s request that the entire agency be struck down. He noted that Dodd-Frank included a \u201cseverability clause\u201d and that abolishing the CFPB would \u201ctrigger a major regulatory disruption and would leave appreciable damage to Congress\u2019s work in the consumer-finance arena.\u201d
As Warren noted Monday, the agency returned $12 billion to consumers \u201cscammed by financial institutions\u201d under Richard Cordray, the previous director, who departed in 2017.
Since the election of President Donald Trump, Warren has repeatedly clashed with the administration and its current, Trump-appointed director, Kathy Kraninger, who was appointed in 2018, over purportedly failing to live up to the agency\u2019s mission.
In the wake of the ruling Monday, some liberal allies pointed out another, perhaps ironic silver lining of the conservative court\u2019s decision, should Democrats win in the November presidential election.
\u201cGood news, Joe Biden can fire Kathy Kraninger the day he gets into office,\u201d tweeted David Dayen, the executive editor of the American Prospect. \u201cUnder the previous structure he would have had to wait until 2023.\u201d
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