Dodd and Frank themselves back CFPB in constitutionality case

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WASHINGTON — Nearly 40 current and former congressional Democrats — including the primary authors of the Dodd-Frank Act — on Friday delivered a full-throated defense of the Consumer Financial Protection Bureau in the pivotal case on the constitutionality of the bureau’s leadership structure.

The sitting and retired lawmakers filed an amicus brief in the legal battle between the CFPB and PHH Corp. The case, which will be heard before a 10-judge panel of the U.S. Court of Appeals for the D.C. Circuit, focuses on the legality of the CFPB’s single-director leadership. It occurs as Republicans are calling on President Trump to remove current CFPB Director Richard Cordray.

The 38 Democrats, who include former Rep. Barney Frank, D-Mass., and former Sen. Chris Dodd, D-Conn., said the creation of the bureau and its leadership structure in Dodd-Frank were constitutionally sound. Their brief said that Congress is equipped with the authority to “shape the federal government” and that the law sought to give the agency its best chance to protect consumers by making it free from outside political influence.

“In creating the bureau, lawmakers determined that it needed two key attributes to fulfill its mission: independence, and the ability to act promptly and decisively in response to new threats to consumers,” the current and former lawmakers wrote. “These requirements counseled in favor of an agency led by a single director, to avoid the delay and gridlock to which multimember commissions are susceptible.”

Current House and Senate members who signed the brief included Sen. Elizabeth Warren of Massachusetts, the agency’s architect; the minority leaders in both chambers, Nancy Pelosi of California and Chuck Schumer of New York; and the ranking Democrats on the House Financial Services and Senate Banking committees, Rep. Maxine Waters of California and Sen. Sherrod Brown of Ohio.

In October, a three-judge panel of the D.C. Circuit ruled that the bureau’s leadership structure violates the constitutional separation of powers. The ruling pointed to the fact that the CFPB director does not answer to a bipartisan board or commission and that the president can only remove a bureau head “for cause.” But that decision was scrapped in February when the D.C. Circuit agreed to hear the CFPB’s appeal before the 10-judge panel.

The Justice Department argued in an earlier filing that the president should be able to remove single-agency directors. The department called for striking the language in Dodd-Frank that imposes the “for cause” standard for removing CFPB directors.

The Democrats argued that the claim of the CFPB’s leadership structure violating the Constitution’s separation of powers “is wholly without merit.”

The Constitution affords members of Congress “discretion to vary the organization of federal agencies according to the tasks they are to perform, and to provide some agencies that implement regulatory statutes a measure of independence from presidential policy control,” their amicus brief said.

“Consistent with this constitutional design," the brief said, "the Supreme Court has long recognized that Congress may shield the heads of regulatory agencies from removal at will, at times upholding removal provisions identical to the one at issue here.”

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