The Consumer Financial Protection Bureau, championed by Elizabeth Warren, was created during the Obama Administration after the 2008 financial crisis in order to protect consumers from bad actors in the credit-reporting, debt-collection, mortgage and student-loan industries. Now the Trump Administration seeks to kneecap its political independence.
We’ve grown accustomed to Donald Trump’s relentless political attacks on the administrative state. His constant barrage is significant, even singular. But, in the end, it is his constitutional attacks on the administrative state that could cause the most damage, and outlast his presidency.
Trump’s latest volley came on Sept. 17 when his administration urged the U.S. Supreme Court to strike a provision in federal law that ensures the political independence of the Consumer Financial Protection Bureau.
Former President Barack Obama created the CFPB as part of a larger response to the financial crisis that started in 2008. It was vested with authority to enforce laws to protect consumers from bad actors in the credit-reporting, debt-collection, mortgage and student-loan industries.
In order to protect the bureau from the political whims of the White House, Congress provided that the head of the CFPB would serve a five-year term, and could be removed by the President only for “inefficiency, neglect of duty, or malfeasance in office.”
But now the administration is arguing that this protection is unconstitutional. In particular, the administration claims it violates the separation of powers by restricting the president’s ability to unilaterally fire the head of the CFPB.
The problem with this claim is that the Supreme Court has affirmed executive agency independence against exactly this kind of challenge. In 1935, the court in Humphrey’s Executor v. United States upheld the independence of the Federal Trade Commission, a multi-member body whose members the president could remove only for the same “inefficiency, neglect of duty, or malfeasance in office” that protects the head of the CFPB. A half-century later, in Morrison v. Olson in 1988, the court upheld the independence of the Independent Counsel, an office occupied by just one person who the Attorney General could remove only for “good cause.”
The Trump administration insists the CFPB is different, and that the protection of this top position represents a greater intrusion into executive authority. It said that, unlike the FTC, the head of the CFPB is a single person, with greater executive authority. And it claimed that, unlike the Independent Counsel, the head of the CFPB possesses vast and unchecked executive authority.
But then it went a step further. It argued that if the court could not distinguish Humphrey’s Executor and Morrison, it should outright overrule them. In making this argument, the administration might have reckoned that the court now has five justices — conservatives appointed by Trump and other Republicans — who are prepared to do just that.
If the court takes the case and rules the way the administration wants, this could have significant and lasting effects on the political independence of executive agencies. At a minimum, it could mark the end of the political independence of the head of the CFPB. At a maximum, it could mark the end of all political independence within the executive branch.
So even if we’ve become inured to President Trump’s daily barrage of political attacks on the administrative state, this constitutional attack, with its long-lasting implications, ought to grab our attention.
This column was produced for the Progressive Media Project, which is run by The Progressive magazine, and distributed by Tribune News Service.