Court curbs president’s power to oust director of consumer watchdog
The Consumer Financial Protection Bureau’s director can be fired by the president only for cause, a federal appeals court ruled on Wednesday, restoring security to a job that has become a political lightning rod.
When Congress created the bureau seven years ago, it specified that the director — after being nominated to a five-year term by the president and confirmed by the Senate — could only be removed for “inefficiency, neglect of duty or malfeasance.” That standard differs from those in effect at most other federal agencies, whose leaders can typically be removed at will by a president.
Last year, a three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia found the bureau’s setup to be unconstitutional. On Wednesday, the full circuit court issued a ruling that vacated the earlier decision and upheld the constitutionality of the consumer bureau’s structure.
There is “no constitutional defect” in the unusual independence that lawmakers granted to the bureau’s director, the ruling issued on Wednesday said. The court added: “Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will.”
The Trump administration had argued that the president should have the power to remove the agency’s leader at will. A Justice Department official said, “We are disappointed in the decision and reviewing our options.”
The appeals court decision came too late to protect the suit’s initial target, Richard Cordray, who resigned in November. Cordray, a Democrat appointed by President Barack Obama, took an aggressive approach to regulation that made him unpopular with the financial industry.
Cordray’s departure allowed President Donald Trump to install his own acting director at the agency, Mick Mulvaney, the White House budget director. Mulvaney has dropped some of his predecessor’s lawsuits and investigations, delayed new rules from taking effect and called for more “humility and prudence” at the bureau. A spokesman for the bureau said, “We are analyzing the decision.”
Mulvaney’s appointment is also the subject of a continuing court battle that the Trump administration has prevailed in so far.