The U.S. Supreme Court heard oral arguments on Tuesday concerning a challenge to the Consumer Financial Protection Bureau (CFPB) in a case that could seriously overrule the bureau’s power.
The CFPB is a federal agency created by the 2010 Dodd-Frank financial reform law, and was designed to regulate consumer financial products, from mortgages to payday loans. The challenge to the CFPB involves a structure that gives the agency’s director—currently Richard Cordray—unfettered power to enact and enforce consumer regulations without interference from the president or Congress.
The challengers argue that this structure is unconstitutional because it gives the CFPB director too much unchecked power. They contend that Congress should have the power to remove the director if it’s acting inappropriately, but that the current structure doesn’t allow it.
During Tuesday’s oral arguments, a majority of the justices on the court seemed skeptical of the challenge, though for different reasons. Justice Ruth Bader Ginsburg noted that a similar structure had been upheld in the past with regard to the Federal Trade Commission. Justice Neil Gorsuch indicated that he was concerned that the CFPB’s structure would allow it to become a “runaway agency” and Justice Anthony Kennedy expressed doubts about its constitutionality.
Justice Stephen Breyer, however, seemed unconvinced. He argued that the structure, which allows the director to remain in office until removed from their post by Congress, was similar to the way other independent agencies are currently regulated.
At this point, it’s unclear how the court would rule on the challenge, and no decision was given on Tuesday’s hearing. A decision is expected sometime in the coming months.
Regardless of the outcome, the case has the potential to be a landmark ruling in terms of financial regulation. If the court strikes down the CFPB’s structure as unconstitutional, it could severely limit its ability to regulate the financial sector. If it upholds the agency’s structure, it could lead to stronger enforcement of consumer protections. Either way, the outcome will likely have far-reaching implications for the financial sector and consumers alike.