Supreme Court to decide if Obama-era Wall Street watchdog agency is constitutional
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The Supreme Court on Friday said it will consider whether an Obama-era financial watchdog --- created in part by Democratic 2020 frontrunner Elizabeth Warren in 2010 to police Wall Street in the aftermath of the Great Recession — is constitutional.
The Consumer Financial Protection Bureau is an independent agency of the U.S. government, responsible for consumer protection in the financial sector. It was created by Congress in 2010 to be an autonomous entity, structured so each director serves a five-year term and can only be removed for “inefficiency, neglect of duty, or malfeasance in office.”
Warren, D-Mass., touted on the campaign trail that the bureau returned $12 million to consumers during the Obama administration, The Washington Post reported. She uses the figure to push a presidential platform based on attacking corporate greed and increasing taxes on wealthy Americans.
“Big banks and their Republican allies have been trying to kill the CFPB for years, and the Trump administration is hoping the right-wing, pro-corporate Supreme Court will help. I’ve got news for them: Like it or not, the CFPB is constitutional,” Warren said on Twitter.
An attorney for the Trump administration told the Supreme Court in a brief last month that even the bureau’s current director, Kathleen Kraninger, who was sworn in in 2018, believes the structure of the CFPB violates the separation of powers clause of the Constitution given its director cannot be fired by the president without sufficient cause.
Critics of the bureau say the Constitution gives the president the power to remove top-ranking executive branch officials for any reason or none at all. They say the founders were wary of power being entrusted to any one individual who had not been elected into office, the Washington Times reported.
The Supreme Court “has consistently recognized that the Constitution empowers the president to keep federal officers accountable by removing them from office,” Washington lawyer Kannon K. Shanmugam wrote in the brief, according to The Washington Post.
“While in limited circumstances the court has upheld the constitutionality of certain multi-member ‘independent’ agencies ... the court has never upheld the constitutionality of an independent agency that exercises significant executive authority and is headed by a single person.”
Republicans and banking executives have opposed the bureau since its inception, arguing it often pushing legal margins to slap unnecessary penalties on financial intuitions. White House chief of staff Mick Mulvaney once described the bureau as “a joke” and supported legislation to disband it, the Post reported.
Lower court ruling on the constitutionality of the bureau have been conflicting. A three-judge panel on the Circuit Court of Appeals in Washington, which included then-Judge Brett Kavanaugh before he became a Supreme Court Justice, ruled the CFPB was unconstitutional. The entire court later overturned the decision, the Times reported.